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COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 10 Apr 2014

Payments to Section 39 Companies: (Resumed) Rehab Group

Mr. Brian Kerr(Chairman, Rehab Group) called and examined.

I welcome the witnesses. Last night we received two letters, one from a solicitor representing Ms Angela Kerins and one from a solicitor representing Mr. Frank Flannery. I can understand why Ms Kerins is not attending today as it is due to ill health, and we wish her a speedy recovery, but the committee takes issue with the other comments in her letter. We have issued a reply to her through our legal advisers. Following the hearing today and depending on the information we receive, we might decide to invite Ms Kerins again to a further hearing of this committee.

I and the members of the committee considered Mr. Flannery's letter last night and we have issued a response to it. The issues raised by him in the letter are simply not accurate, in my opinion. These are issues that must be dealt with by the committee and we believe Mr. Flannery and Ms Kerins have a contribution to make to our investigation. There is no doubt about that. The letter refers to the fact that Mr. Flannery did not receive a letter directly regarding our last hearing, but it was made perfectly clear to the Rehab Group, in writing and through the clerk to the committee, that we expected Mr. Flannery to attend our last hearing. It did not help our consideration of these matters that Mr. Flannery was apparently in the House on the day. As I have said publicly, he may not have been invited but I am still not sure whether he was actually invited, as requested through this committee and through Ms Kerins. We do not know the answer to that.

The other issues raised in the letter from Mr. Flannery relate to correspondence that this committee received. We take our role very seriously and that correspondence, under legislation, had to be referred to the Garda. There was no option for the committee but to refer it to the Garda. That is where the matter stands. It was the only option we had and it was done out of respect for the legislation and the law. It was no reflection on Mr. Flannery and nobody here has a personal agenda against him. The committee wishes to put it on record that we reject all of what has been said in the letter from Mr. Flannery.

Our intention is to pursue the spending of public money. This is taxpayers' money and is not our money or the witnesses' money. Out of respect to the committee and the Oireachtas, and in light of the fact that Rehab has received substantial funding from public funds over the years, we expected full co-operation from Ms Kerins and Mr. Flannery. I find it unacceptable and beyond common sense that they take this approach.

The clerk to the committee has brought an e-mail from Mr. Dore to my attention. I will make a copy available once I have read it into the record. It is addressed to the clerk and states:

Shortly before 5pm this evening you received a letter from my client.

This letter was sent to you by email and it was hand delivered. This letter was marked "strictly confidential".

Despite this, within the hour, extracts / quotations from this letter appeared on the RTE website.

This could only have happened because this strictly confidential letter addressed to you was leaked to RTE. This is shocking and requires an immediate explanation.

Please confirm whether or not you leaked this strictly confidential letter to RTE and if so on what possible basis you did this.

If you did not leak it please identify who did.

Please let me hear from you as a matter of urgency.

Yours faithfully

Robert Dore

We will put that in the nonsense file and ask that it be circulated to members.

The game of cat and mouse and trying to extract information should be over in the interests of the charity sector. It is not all about Rehab but about the charity sector. I ask for the full co-operation of the witnesses and I welcome their recent statements. I hope we can resolve the issues and I welcome the fact that the witnesses have attended. We requested specific people to attend on the last occasion and it did not happen. Had we received co-operation, we might not be here today. I look forward to a reasonable exchange and the witnesses should ask for a break if they need one for any reason.

I ask members, witnesses and those in the Gallery to turn off their telephones. They interfere with the sound quality in the transmission of the meeting. Witnesses are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the House or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provision within Standing Order 163 that the committee should also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies.

I welcome Mr. Kerr and the Rehab Group witnesses and I ask him to introduce his colleagues.

Mr Brian Kerr

I thank the Chairman. I am joined today by my colleagues, Mr. Declan Doyle, chairman of the remuneration committee, Mr. Hugh Governey and Mr. Liam Hogan, Rehab Group board members and members of the remuneration committee, and Mr. Keith Poole, director of finance and company secretary. Members will note that neither Ms Angela Kerins nor Mr. Frank Flannery is in attendance today. We wrote to both to determine if they would attend. Both Ms Kerins and Mr. Flannery have confirmed that they are not in a position to attend. Unfortunately, we cannot compel them to attend. With permission, I will make an initial statement and then ask my colleagues, Mr. Declan Doyle and Mr. Keith Poole, to make specific statements that will address issues raised at, and since, the committee's meeting on 27 February.

In recent weeks, the board of the Rehab Group has been reflecting on the difficult period that the organisation has been through in recent months. The stark fact is that the reputation of Rehab has been seriously damaged. We recognise that our response as a board to recent political and public demands for information has been inadequate, in particular because of the legal constraints that the board is under in disclosing information about the terms and conditions of some senior people. In part, this is because the business and governance structure of the Rehab Group was not adequate to manage a challenging and changing situation. In addition, we recognise that, as a board, we have not exercised strict and appropriate oversight of certain issues that have come to public attention in recent weeks.

The board's priority is to initiate a programme of transformation and change that will allow us to candidly confront the issues before us and to rebuild the reputation, staff morale and effectiveness of the organisation. Importantly, this programme of change must strive to recover the confidence and trust of the people who use our services, our staff, the people of Ireland who fund us, including the Government, and other stakeholders, not least our colleagues in the charity sector who have suffered because of the fallout over the current controversy.

As a matter of urgency, we are committed to making whatever changes are necessary, including changes to the board, to ensure the organisation can have the full confidence of those who use our services and those who fund us. This journey will not be completed overnight but the board believes that, if we set the right strategic direction and remain committed to that path, success can be achieved and a new dawn will emerge for Rehab. A critical part of the recovery strategy is that we initiate a root and branch review and an urgent transformation of how Rehab is governed and conducts its affairs. In simple terms, this means asking an external expert of repute and integrity to advise us on how best to address the following questions. What changes do we need to initiate in order to renew the board, and the way it works, so that we have the right skill set and the right procedures for providing the quality of oversight required in an organisation of our size and complexity, operating in the charity sector? How best can we increase the degree of transparency about what we do and, for example, how people are paid across the organisation, so that we not only meet but exceed reasonable expectations and regulatory requirements? Does the current structure of the group support the long-term mission of Rehab in a rapidly changing regulatory environment? How can the board function so that it supports and upholds the core values and principles of Rehab? We have engaged Dr. Eddie Molloy to conduct and lead us in this review and transformation programme. The process will include engagement with staff to ensure their concerns are addressed in the unfolding reforms.

On behalf of the other board members here, I wish to address our non-attendance at this committee on 27 February. Following initial correspondence from the committee, it was decided that Ms Kerins, Ms Kelly, Ms Keane and Mr. McGuire were the people best placed to deal with the agenda items listed by the committee and they set about preparing accordingly. As a result of miscommunication and misunderstanding within Rehab, the team coming before the Committee of Public Accounts was not changed following the e-mail of 20 February from the Committee of Public Accounts.

We accept this was an error on Rehab's part and we regret any offence felt by the committee arising from our non-attendance.

Before handing over to my colleagues, I would like to address some questions which have arisen about the election of the board. The Rehab board is a company limited by guarantee, with 12 volunteer board members. Members are elected for three years and can serve three terms. The chairman is elected on an annual basis and can serve a maximum of six terms. The board recognises that it has been remiss on renewing the board membership, that this is a priority area, and it has asked Dr. Molloy to assist us with refreshing the board as soon as possible. As I mentioned earlier, one of the key issues on which Dr. Molloy has been asked to advise us relates to the changes we need to initiate in order to renew the board and the way it works so that we have the right skill set and the procedure for providing the quality of oversight required in an organisation of the size and complexity of Rehab operating in the charity sector.

I will ask Mr. Declan Doyle, chairman of the remuneration committee, to speak on that committee's work.

Mr. Declan Doyle

I wish to be associated with the remarks of Mr. Brian Kerr on our non-attendance at the meeting of 27 February 2014. I too regret if offence was caused to the members of the Committee of Public Accounts. Let me reiterate his comments on our commitment to providing responses that are as fulsome as possible within the law.

I will focus on issues relating to the remuneration of the chief executive and the Rehab Group senior management team in my role as chairman of the remuneration committee of the Rehab Group board.

I note from the queries that were raised at the Committee of Public Account that members are interested in understanding how the remuneration committee works. The committee's duties focus on ensuring the ongoing appropriateness and relevance of the remuneration of the chief executive and the senior management team. The committee comprises at least four members of the non-executive board of the group. We report annually to the board on our activities. Our meetings can be attended by the chief executive and external advisers, as appropriate but not as a matter of course. I must stress that no individual can be involved or was involved in any decisions as to his or her own remuneration.

The committee commissions reports or surveys to help it fulfil its obligations as required. Out duties include specifically determining and agreeing with the board the broad policy for the remuneration of the chief executive and senior management team. In undertaking that duty, we take account of a range of factors, including the need to be competitive in the marketplace. The objective of the policy is to ensure that members of the senior management team are provided with appropriate incentives to encourage enhanced performance and are in a fair and responsible manner rewarded for their individual contributions to the success of the group. Within this agreed pay policy, the committee specifically determined the total remuneration package of the chief executive, including bonuses where appropriate. It also determined the salary range for the senior management team. It approves the design of performance related pay schemes for the chief executive and senior management team and determines the policy for and scope of pension arrangements for senior executives. The committee agrees the policy for authorising claims for expenses from the chief executive and chairperson and non-executive directors. Under its terms of reference, the committee may review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any change it considers necessary to the board for approval.

Following the events of recent months, the members of the remuneration committee have requested that a review of the work of the committee be undertaken by Dr. Molloy as part of the broader review of governance and structures to be undertaken by him. In Mr. Kerr's presentation, he referred to the rights of individual employees to confidentiality in relation to his or her remuneration and conditions of employment. In the course of this controversy surrounding Rehab in recent months, we found it quite difficult to balance these legal rights with the requests from the Committee of Public Accounts for details of salaries, pensions and bonuses of certain individuals. The board is under legal constraints regarding disclosure of information about the terms and conditions of employees, given the legal right to confidentiality enjoyed by these individuals. This is not a circle we can square easily.

The right to confidentiality in respect of sensitive personal information is a right that is enshrined in data protection legislation passed by the Oireachtas following legislation passed at European level. However, it is important to state that in the interest of transparency we are committed to disclosing as much detail as we can to the Committee of Public Accounts. In order to meet this commitment, we have undertaken a number of steps to ensure we are as transparent as possible within the law. On 17 February, the board of the Rehab Group disclosed details of the remuneration of our former chief executive following her decision to waive her rights voluntarily to confidentiality in relation to the details of her terms and conditions of her remuneration. In the past week we have taken additional steps in an attempt to secure permission for further disclosures to the Committee of Public Accounts. We wrote to the former CEO and formally requested that she provide us with clear indication of the information she permits us to communicate on the details of her remuneration as chief executive up to and including the date of her cessation of employment, as well as her pension provision. In legal correspondence received from our former chief executive last night, her lawyers specifically prohibited us from any disclosures in relation to her pay and her terms and conditions of employment. She also expressly withdrew any waiver she had previously given. I would like to quote from the letter we received from her solicitors, Eames Solicitors:

Please note that any disclosure in relation to our client's pay and/or terms and conditions of employment by the Rehab Group, subsidiaries, employees, servants, agents or advisers is strictly prohibited. In this regard and in light of the previous disclosure by Rehab Group and recent commentary in particular by the Public Accounts Committee, our client now expressly withdraws any waiver she may have previously given in good faith as such details could be disclosed in limited circumstances. Our client is entitled to her confidentiality rights and to the protection of her personal private and professional information and correspondence at law and under the data protection Acts, no such disclosure is permitted. In that regard no permission is given to the Rehab Group and/or subsidiaries or its employees, servants, agents or advisers to discuss, disclose or comment in any way on these matters, including without limitation information on our client 's terms and conditions of employment or any cessation of same to the Public Accounts Committee or any such body. Any breach of this obligation under the data protection Acts or at law will result in legal action to protect the interest of our client against the bodies and persons responsible and this letter will be adduced in evidence of those circumstances.

Is a copy of that letter available?

Mr. Declan Doyle

I am afraid it is privileged. The legal advice from our lawyers is that this is privileged information.

In relation to Mr. Flannery, we also wrote to him on Thursday, 3 April 2014, and formally requested that he indicate the detail that he will give us permission to communicate to this committee in respect of his remuneration as chief executive of the Rehab Group as well as pension provisions. In correspondence received from Mr. Flannery he stated, and again I quote, that he "was unable to assent to the disclosure of any personal informational in relation to his remuneration or pension entitlements".

As Mr. Kerr stated earlier, the board's approach to this hearing has been to meet the requests of the PAC wherever possible. However, in this instance, meeting the requests of the committee would involve Rehab breaching the law as it relates to the former chief executive and Mr. Flannery, something that members will understand we cannot do.

Let me turn to the recent issue of salary disclosure for senior executives within the Rehab Group and its companies. The remuneration committee sets the salaries of Rehab Group's senior management team only, that is, the eight posts that presently form the group management team. One of these posts is now vacant and has been for the past three weeks. The committee does not have role in any posts outside that circle. In line with the approach to the former chief executives to ask for permission to publish salary details, the Rehab Group has asked the seven senior executives who comprise the senior management team for their permission. These individuals have taken the step of waiving their rights under data protection and personally given us permission to communicate details of their remuneration and their post to the PAC. This information has been provided to the clerk and it will be circulated to all members.

It is important to highlight the very broad and significant role that each of these individuals holds in the Rehab Group. All have international responsibilities across the organisation and have operational responsibility for our training, health, social care, rehabilitation, employment and education service as well as for our central services. These services are areas such as human resources, finance, IT, communications, policy and service compliance, health and safety and procurement.

Four other managers outside the remit of the remuneration committee are in receipt of salaries greater than €100,000. Given that they are outside our remit, we have not asked them to waive their rights.

In publishing these salaries, we hope this disclosure will be taken in the spirit in which it is given. The individuals in question have given permission for this information to be made public in the interests of greater transparency. As members will be aware, many individuals within the group have been subject to undue professional and personal attention in recent weeks. We ask that the privacy rights of these individuals are not further impacted by virtue of this voluntary disclosure.

Rehab has already submitted to the committee details of all salaries of more than €65,000 paid to employees of the group in its Irish divisions. The information is provided in bands of €10,000, which is line with best practice for charities' reporting or SORP. Members are probably aware of this term, which Mr. Poole will address shortly.

I take this opportunity to provide the committee with additional information in respect of the report provided to the Rehab Group board by Towers Watson entitled, the 2014 Remuneration Review of the Rehab CEO and Senior Management Team. The salaries of the executive team members of the Rehab Group are set by the remuneration committee of the Rehab Group, which commissions independent reports on salary levels in general Irish industry to advise it in carrying out its work. As part of this process, the responsibility of each post is individually and independently assessed internally and externally. In developing a policy for setting remuneration, the board has traditionally looked to the market median, which is basically the middle of the general pay market or the point at which 50% of wages will be higher and 50% lower, to guide decision-making on pay levels and individual pay positioning. Independent reviews of the posts within the executive team take place regularly, most recently by Towers Watson in 2014.

I confirm that the report provided to the committee on 11 March is the full report produced by Towers Watson and provided to the board on 17 February. It provides details of information provided to the group board to inform it in relation to decisions made by the remuneration committee charged with oversight in this area. Many members of the committee have sought additional information in relation to this report. It is usual in organisations that use a remuneration committee for the board to receive a report without any specific personal data in it and that this level of detail and personal data is restricted to the remuneration committee. A more detailed working document, containing personal data, presented by Towers Watson for use by the remuneration committee was used to inform the development of the final report. We have sought the permission of Towers Watson to disclose this discussion document to the committee and, until this morning, it had given us permission to do so, with a certain level of information redacted. In the light of Ms Kerins's recent letter to us, which Towers Watson has seen, the company is not prepared to include in the report certain information which is in the public domain and of which all members are well aware. In the report the committee will receive from Towers Watson, which is the full report, all information relating to the chief executive has been redacted, even though, as I say, this information is already in the public domain.

Members of the committee have raised the issue of Rehab's pay policy and philosophy. Many years ago, the Rehab Group took the decision to benchmark senior salaries, that is, those of the senior management team and chief executive, against commercial industry norms prevalent in general industry in Ireland. This decision was taken to reflect the size, scale and diverse activities of the organisation and its international reach.

In line with the sentiment referred to in Mr. Kerr's statement, the remuneration committee accepts that we have not given adequate attention to comparisons with organisations in the charity and not-for-profit sectors. The Rehab Group is a large organisation which provides a vast range of excellent services to thousands of people and operates in a number of different industries. We employ more than 3,500 staff, and this number is constantly growing. The organisation has consistently maintained employment growth in the biggest recession this country has seen. However, we have asked Dr. Molloy, in his review, to consider how we can align ourselves more closely with the charity and not-for-profit sector.

I reiterate Mr. Kerr's statement that by engaging Dr. Molloy to lead a review and transformation project in relation to the governance arrangements in Rehab, we believe we have taken an important step. The review will challenge us to confront candidly the issues before us, rebuild our reputation and staff morale and enhance the effectiveness of the organisation. I will hand over to Mr. Keith Poole who will provide further insights into the financial management of the Rehab Group.

Mr. Keith Poole

In this opening presentation I would like to pick up some of the issues that have come up since and prior to the previous meeting of the committee, particularly details of the funding that Rehab receives from the State, information regarding the Rehab Group's structure and details in relation to the statement of recommended practice for accounting and reporting by charities, commonly known as SORP, as well as our plans in this regard. I will also cover some other matters of importance to the committee.

To give the committee a full picture of the funds that Rehab receives from various Government agencies, we are circulating a schedule showing all income received from Government agencies or Departments in the past two years. In 2013, Rehab received €95 million in total. In addition to income received from services provided on behalf of the Health Service Executive and SOLAS and moneys from the Department of Justice and Equality, which amounted to €89 million, other income amounted to €5.9 million in 2013. The two most significant items included in this income were capital grants received from the Department of the Environment, Community and Local Government under the capital assistance scheme for the provision of housing for people with disabilities and funding received under the wage subsidy scheme, known as the WSS, from the Department of Social Protection. The wage subsidy scheme is a financial subsidy available to all non-public sector employers, be they in the private or not-for-profit sector, to support them to employ people with disabilities who may have a reduced level of productivity as a result of their particular disability. We currently claim this subsidy for just over 170 of our employees.

For completeness, we have shown the various allowances we receive for our clients and administer on behalf of our funders. These are not included in our income as they are effectively money in, money out. We have provided the committee with a set of Rehab's consolidated financial statements for the year ended 31 December 2012, and I will endeavour to answer any questions members may have on these today.

As Mr. Kerr indicated, the Rehab Group is a company limited by guarantee which holds a CHY number granted by the Revenue Commissioners. It is an independent charity which has to ensure its financial sustainability to continue to support the people who use its services. We acknowledge and recognise that our services are funded by the taxpayer and that brings with it both privileges and responsibilities. However, unlike other charitable organisations in our sector, referred to as section 38 organisations, our staff do not enjoy the same security of tenure or pension benefits as colleagues in the public sector. If, for some reason, we lose a contract or service provided to a State body, as we sit here today, Rehab is responsible for any closure costs, for example, lease terminations or redundancies of staff who would not be protected under TUPE legislation.

Rehab's primary objective is set out in its memorandum of association. In simple terms, there are three types of activity that Rehab undertakes both here and abroad. We provide training, education and employment services aimed at getting people into a job or progressing to further education. We provide various types of health and social care services that promote independent living and choice for our clients and their families. We also provide employment opportunities for disabled and disadvantaged people through social enterprises. To achieve this, our legal structure comprises three different types of trading subsidiaries. These are subsidiaries that undertake charitable activities; subsidiaries that undertake activities for furtherance of the group's objectives; and subsidiaries that undertake activities for generating funds. Some of our subsidiaries that undertake activities for the furtherance of the group's objectives also generate funds.

There are a number of subsidiary companies in our structure that are either holding companies or are dormant for all intents and purposes but we strive to ensure that we dissolve entities that are no longer required.

Currently, the group contains 31 legal entities; a copy of the structure of the group has been handed to the clerk. The top entity is the company, the Rehab Group. Of the 31 entities in the group, 15 are registered in Ireland, 15 in the UK and one in Saudi Arabia. Fourteen are charities which are either registered with the relevant body in the UK, through the Office of the Scottish Charities Regulator or the Charities Commission for England and Wales, or hold a CHY number here in Ireland. As soon as the new charity regulator commences her work, we will register all our Irish entities, which hold CHY numbers, as charities under the Charities Act 2009.

Rehab has now committed to adopting the statement of recommended practice, SORP, for accounting and reporting by charities. Practically, this will require some significant changes in how we prepare our financial statements and we have committed to doing this for the year ended 31 December 2014. The implementation of SORP will lead to a number of changes to Rehab's reporting both in financial terms and what we must include in our annual reports. It is important to emphasise it is not just a financial reporting standard. SORP prescribes the principles and essential elements to be included in our annual report which accompany our accounts. The annual report and the accounts, taken together, will provide a picture of what we have achieved, our outputs as well as the difference we have made - our impacts. It will also include relevant information about our subsidiaries and governance structures. It will enhance the relevance and comparability and improve people's understanding of the information presented in our accounts and in the annual report. Most importantly, it will give all our stakeholders, be they funders, service users, donors, staff, financial supporters and others, a high level of accountability and transparency. Over time, it will improve the quality of financial reporting by all Rehab entities. It will also detail the methodology employed in the allocation of shared service costs. As our 2013 accounts are almost finished and the majority of the audit work has been completed by our auditors, PricewaterhouseCoopers, it would not be possible to implement SORP for 2013.

SORP will also require us to continue to publish remuneration of all staff in excess of €65,000 in bands of €10,000. This is work that we have already begun. As others have said, we have already published details of all salaries paid to employees of the Rehab Group and its Irish divisions over €65,000, in bands of €10,000. This approach is a requirement under law for charities in the UK and is followed by a number of charities here in Ireland and recommended by umbrella bodies such as The Wheel and the Irish Charities Tax Reform Group, ICTRG, as best practice.

We understand the frustration of some Deputies who have stated that the disclosure using the SORP method for charities does not go far enough and who wish us to individually name all relevant postholders. Prior to attendance at the last meeting of the Committee of Public Accounts, the Rehab Group discussed the matter with both our legal advisers and the Data Commissioner. Both have advised us that we cannot disclose salary details in a way that would make individuals identifiable except for the express purpose for which permission has been obtained from the individuals concerned.

It is not possible to give that information to the committee because we do not have the permission of all relevant staff who receive in excess of €65,000, but the group's commitment to transparency is, I believe, real, and by committing to implement SORP, as soon as practically possible, we will automatically do so into the future.

There has been some coverage of payments to Rehab Group directors in the media. We recognise that this is a matter of concern for members of the committee and members of the public. By way of clarification, I can confirm that no remuneration has ever been paid to a director of the Rehab Group board in respect of their roles as directors. In addition, no fees are paid to directors of subsidiary boards for their roles as directors. In recent years, certain directors or their firms were paid by Rehab for the provision of services. These included quantity surveying, publications and editing.

In addition, Mr. Frank Flannery was paid professional fees for consultancy services, including lobbying, for the group and subsidiary companies. These fees were disclosed in the group's annual accounts from 2011, as Mr. Flannery was a director of the group. He commenced working as a consultant on his retirement as CEO in 2006. The annual payments to Mr. Flannery for his consultancy services have been given to the clerk.

Rehab is committed to effecting significant change in how the organisation is governed and structured. We have learned painful lessons. It is imperative that we act on these lessons. It is also imperative that the group adopts best practice to clearly demonstrate the value for money for services we provide to the State and we have a determination to do so. This determination is underpinned by the review, already mentioned, to be undertaken by Dr. Eddie Molloy. This will lead, inevitably, to significant change and will enhance performance in how Rehab is governed.

I thank Mr. Poole. Can each of those statements and the associated documents be published?

Mr. Keith Poole

Yes.

Is that agreed? Agreed.

On a point of clarification on that particular issue, I refer to Mr. Declan Doyle in an effort to be of assistance to him. He read a letter which he said had legal privilege and that he could not distribute it. By reading it here in front of the cameras, it can be distributed by all the media channels today. I wonder if he has inadvertently waived that privilege by reading it on to the public record for transmission.

Mr. Declan Doyle

I am not a lawyer.

I am saying this to advise Mr. Doyle. I am concerned that there is a contradiction between saying the document has legal privilege and, on the other hand, reading it out to the committee.

Mr. Declan Doyle

The advice I received was that I could read it out but I could not distribute it.

Okay, I just wanted to clarify that point.

So it is now to be published.

Once one reads it into the record-----

Mr. Declan Doyle

I have read it into the record so it is published.

It is now published.

Mr. Declan Doyle

It is a section of the letter.

It is published.

Mr. Declan Doyle

I understand, Chairman.

Did Mr. Doyle receive a similar letter from Mr. Flannery's solicitor?

Mr. Declan Doyle

The quote which I gave the committee was a quote from his letter, in response to our letter about the level of information we could reveal, which is in my statement.

That is fine. I call Deputy Kieran O'Donnell.

I thank the witnesses for appearing before the Committee of Public Accounts today. It is regrettable and extremely unfortunate that neither Ms Kerins nor Mr. Flannery sought to appear before the committee. The message must go out loud and clear that no one person or two people are bigger than any one organisation. I ask the witnesses how they feel about the fact that neither Ms Kerins or Mr. Flannery has sought to defy the committee in terms of the damage it is doing to the organisation and the entire charities sector? How does Mr. Kerr feel about them not appearing?

Mr. Brian Kerr

It is unfortunate but there is nothing we can do about it. We have tried and that is all we can do.

Does Mr. Kerr feel let down?

Mr. Brian Kerr

I think it would be better if they could have seen a way to appear.

How many years has Mr. Kerr been a director of the Rehab Group?

Mr. Brian Kerr

Thirty-two years, unfortunately.

How long has Mr. Kerr been chair of the Rehab Group?

Mr. Brian Kerr

Five years.

For how long has Mr. Kerr been a director of Rehab Lotteries company?

Mr. Brian Kerr

Many years.

How many years is Mr. Doyle in the Rehab Group?

Mr. Declan Doyle

Twenty-six years.

And on Rehab Enterprises?

Mr. Declan Doyle

About seven years in Rehab Enterprises but I am not entirely sure. I need to check that.

How long is Mr. Governey on the Rehab Group and the Rehab Enterprises?

Mr. Hugh Governey

Six years approximately.

And in Rehab Enterprises?

Mr. Hugh Governey

Four years approximately.

How long has Mr. Hogan been on the board of the Rehab Group?

Mr. Liam Hogan

Fifteen years.

And how long has he been on the audit committee?

Mr. Liam Hogan

Approximately eight years.

And how long with Care Trust Limited?

Mr. Liam Hogan

Five years.

How long has Mr. Poole been with the Rehab Group?

Mr. Keith Poole

I am not a director of the Rehab Group, but I have been employed with it since 1996.

How long has Mr. Poole been company secretary with the group?

Mr. Keith Poole

Since 2007.

How long has Mr. Poole been a director of Rehab Enterprises, Rehab Care, the National Learning Network, Rehab Lotteries and Care Trust Limited?

Mr. Keith Poole

I do not have the specific answer to that, but a large number of years.

Therefore, he is familiar with their proceedings over many years.

Mr. Keith Poole

Yes.

Our role here is to look at the probity of how public money is spent, and Rehab has provided us with a large amount of information which we are trying to assimilate quickly. I would have liked to have received this information yesterday or earlier. The information provides figures regarding the number of grants received in terms of overall income and expenditure from the State. In terms of subsidies paid to staff, is that figure included in the overall turnover?

Mr. Keith Poole

The wage subsidy scheme, WSS, money is included. If the Deputy looks at the information I have provided, he will see I have highlighted the income and expenditure items and the items that go through our balance sheet.

Am I correct in saying, therefore, that, overall, the group received €92.572 million from the State and that the overall turnover of the Rehab Group is approximately €183 million?

Mr. Keith Poole

Yes.

Therefore, approximately 52% of the overall turnover of the Rehab Group comes from the State.

Mr. Keith Poole

Yes.

That information is not in the public domain. There it is believed to be less than 50%. Based on the fact it is over 50%, the Rehab Group should fall under the remit of the Comptroller and Auditor General. Is that correct?

Mr. Seamus McCarthy

I do not think that is an automatic provision.

Is it the practice?

Mr. Seamus McCarthy

Certainly, in the case of many organisations that get more than 50%, it is a general guideline, but it also depends on the nature of the business. Therefore, semi-State bodies that receive more than 50% would come within the remit of the Comptroller and Auditor General.

The message needs to go out that, in total, capital grants of €92 million of State resources went into Rehab. If we add in capital grants of just under €3 million, almost €96 million of State resources went to the Rehab Group, an amount that is in excess of 50% of the organisation's turnover. Does Mr. Poole agree with that?

Mr. Keith Poole

Yes.

That information is not in the public domain, but it changes the complexion enormously in terms of the issues that arise. I welcome that the seven staff members of Rehab here have waived their right in terms of disclosure of the level of their salaries. The director of finance, Mr. Poole, receives a salary of €152,667; director of health and social care, €150,000; director of training and employment and education, €174,000; director of human resources, €141,552; director of fund-raising lotteries, €130,000; director of policy and service compliance, €104,000; and director of public affairs, communications and IT, €130,000. I welcome this and believe Ms Kerins should have done likewise.

Am I correct in saying that Mr. Poole is a chartered accountant by training?

Mr. Keith Poole

Yes, that is correct.

What I find interesting is that Ms Kerins appears to have been a director of every company within the Rehab Group. Not only was she a director, she appears to have been the chairperson of those companies. She was chairman of the boards of the National Learning Network, Rehab Care and Rehab Enterprises. The one company of which she is not a director is the Rehab Group.

Mr. Keith Poole

That is correct.

Mr. Poole, as a chartered accountant, is familiar with company law. Is it correct that one is required, under company law, to disclose the director's remuneration in the statutory accounts?

Mr. Keith Poole

That is correct.

Is it not ironic that Ms Kerins is paid by the Rehab Group via management charges coming up from various companies, yet Rehab Group is the only company within the group of which she is not a director? How did this come about?

Mr. Keith Poole

The same situation applies to myself. The reason is that, because the Rehab Group is my employer, I cannot be a director of the group. It is because it holds a CHY number and, as an employee, we cannot be directors.

With regard to funding, we have distributed a summary of all the funds that come up. The Rehab Group is the top entity in the structure. It receives shared services income from State-funded companies within our group. Other funds come into the Rehab Group also, for example, from the Care Trust. In 2012, which is the year for which we have provided the accounts, we would have transferred more than €1 million from our UK operations into the top entity. In common with many groups, a pool of money comes into the centre, and this pays for central services and the top level salaries.

In terms of what we charge, the schedules have been provided regarding what we charge into the entities that deliver State services. Historically, we have not charged senior management salaries into those entities.

Whose salaries among top management, of the seven directors, including Ms Kerins, are paid from the Rehab Group, the parent company?

Mr. Keith Poole

There are two whose salaries, or an element of them, are recharged into the services, those of the director of training and the director of health and social care. The percentages are provided.

Is that a management charge?

Mr. Keith Poole

Yes. The salaries of the rest of us are not.

How are the other directors paid? What is the source of that income?

Mr. Keith Poole

The source is the pool of the moneys I already outlined.

Can the witness explain that pool?

Mr. Keith Poole

The pool consists of moneys that come across from the United Kingdom, the Care Trust, and any other moneys that come into the centre, the top entity.

What comes into the top entity? Will Mr. Poole take us through the sources of income? What is the name of the holding company?

Mr. Keith Poole

It is the Rehab Group.

What is the income of the Rehab Group? How much income does it take in per year? People see the Rehab Group as a consolidated group, but can Mr. Poole break down the turnover of that company per year and where that money comes from?

Mr. Keith Poole

The charitable lotteries fund is included in our turnover, but I will not include it because it is allocated to specific items.

Is any of the charitable lotteries fund allocated towards salaries?

Mr. Keith Poole

No, absolutely not. The amount of money that comes in is just under €12 million.

Where does that money come from?

Mr. Keith Poole

It is shown in the figures the Deputy has in front of him. It comes from the shared services money.

What is the total figure there?

Mr. Keith Poole

The total for 2012 was €4.7 million.

Is that basically the management charge?

Mr. Keith Poole

Yes. Approximately €1.2 million comes from the UK.

From where in the UK?

Mr. Keith Poole

From our training company in the UK.

Where does the balance of the moneys come from?

Mr. Keith Poole

It comes in from rental income and from the Care Trust.

How much comes from the Care Trust.

Mr. Keith Poole

In the year in question, the amount was €1.5 million.

And what was the rental income?

Mr. Keith Poole

Approximately €1.5 million.

We are still short. This amounts to €8.9 million, so we are short approximately €3.1 million.

Mr. Keith Poole

That is roughly the amount from the charitable lotteries fund, which I do not include because it is specifically allocated.

How is that allocated?

Mr. Keith Poole

When we do the annual return for the charitable lotteries fund, we state to what specifically it is being allocated. The Deputy has seen the returns. It is primarily capital expenditure and it also goes against a few other items. To satisfy the Department of Justice and Equality, we must show it in our accounts as cash received, so we show it in our turnover.

What is the total figure for salary payments from that parent company?

Mr. Keith Poole

I do not have that to hand, but I can get it for the Deputy.

But Mr. Poole has the accounts in front of him.

Mr. Keith Poole

Yes, but I do not have the individual companies-----

But Mr. Poole would have been aware, coming in here, that this is an issue we would have been discussing.

Mr. Keith Poole

Yes. I can get that.

Mr. Keith Poole

I can get it in about ten minutes.

That is fine. Out of that company, which salaries are paid? Is Mr. Poole's salary as director of finance paid?

Mr. Keith Poole

Yes, absolutely.

What about the director of health and social care?

Mr. Keith Poole

Yes. The seven people on the list in front of the Deputy are all paid from that company. The other people are support staff. There are about 65 to 70 people on it.

Ms Kerins is paid from that company as well.

Mr. Keith Poole

Yes, absolutely.

Her letter to the committee, which is now public, stated that, in response to a question from Deputy Ross towards the end of the previous session about a reduction in her salary in 2013, she inadvertently gave the answer "No". What would be the make-up of a salary for a CEO in the organisation?

Mr. Declan Boyle

They get a basic salary and a defined contribution pension of 6% at the moment. If they have a car, they might have a car allowance or a company car. They would also receive vouched expenses.

The defined benefit pension scheme was finished in March.

Mr. Keith Poole

We took the decision to finish in December 2012.

When was it wound up?

Mr. Keith Poole

It takes quite a considerable time to wind up the defined benefit pension scheme, but it is almost wound up. Members have received the majority of their transfer values.

Was there a shortfall in the defined benefit?

Mr. Keith Poole

Yes, there was.

How much was that?

Mr. Keith Poole

Under the minimum funding standard, it was originally around 70%, so there was a 30% deficit.

What was the value?

Mr. Keith Poole

It was €35 million.

How was that funded?

Mr. Keith Poole

Unfortunately, the members had to take a lot of the pain on that one. In 2012, the decision was taken that we could no longer sponsor the scheme so it had to be wound up. Following long negotiations with the trustees and their independent advisers, an arrangement was put in place whereby other money will be put into the active and deferred members' pot over a number of years, and then it was closed. It looks like it will end up at around 80% to 81% funded.

What is the anticipated shortfall then?

Mr. Keith Poole

The shortfall will be on individual people but it will be-----

Will anyone who is working at that time have a combination of pensions?

Mr. Keith Poole

The defined benefit pension scheme is gone.

Did Ms Kerins qualify under the defined benefit scheme or the defined contribution scheme?

Mr. Keith Poole

Ms Kerins was the same as everyone else, so her pension was transferred to the defined contribution scheme. In a defined contribution scheme, there is just an amount of money that is there.

Did she hold the value based on the defined benefit scheme at the time? Was she able to transfer the value of the defined benefit scheme to the pension she has now received?

Mr. Keith Poole

All I can say is that in common with everyone else, her transfer value was transferred to a defined contribution scheme.

When the defined benefit scheme was being wound up, was there any question that a contribution could be made towards the shortfall out of funds received by the Rehab Group?

Mr. Keith Poole

The arrangement that was reached with the trustees has a number of years to work its way through.

Mr. Keith Poole

I think it is six years.

What is the approximate total value over those six years?

Mr. Keith Poole

It is approximately €6 million.

How will that be funded?

Mr. Keith Poole

That will be funded from all the subsidiary companies where the employees reside.

I wish to move on. We have just been provided with documentation in respect of Laragh Consulting. Am I correct in saying that the total value over the seven years is €409,744?

Mr. Keith Poole

If it is added up, yes, that is correct.

We were led to believe that Laragh Consulting was not trading as a company. Was Mr. Poole aware of that?

Mr. Keith Poole

I became aware of that, yes.

Did that change the way payments were made?

Mr. Keith Poole

Absolutely.

Mr. Keith Poole

I was preparing the financial statements in January 2013. There must be a related party disclosure, so these have to be disclosed. I checked the company Laragh Consulting on the CRO website and discovered that it had been struck off. Therefore, it does not exist. I brought this to the attention of the chief executive, and she asked me to speak to Mr. Flannery, which I did. I told him that this company could not issue invoices any more because it does not exist, so following on from that date, he invoiced under his own name, Frank Flannery. I advised him that the fact these payments were made to Laragh Consulting would be disclosed in our accounts as soon as they were filed, and he assured me the matter was in hand and he was getting sorted, but that was not my business, to be honest about it.

What was not Mr. Poole's business?

Mr. Keith Poole

That the matter was in hand and was getting sorted out.

What was getting sorted out?

Mr. Keith Poole

Putting the company back on the register.

Is it back on the register now?

Mr. Keith Poole

Not to my knowledge. I have not checked in a number of weeks.

If we look at the payments over the years, there was an average of about €58,000. There was €40,000 in 2007, €69,000 in 2008, €44,000 in 2009, €60,000 in 2010, €51,000 in 2011, €66,000 in 2012 and then €80,000 in 2013. What were these payments for?

Mr. Keith Poole

I did not commission the work. Ms Kerins did so, apparently.

Would something like that have had to go to the board?

Mr. Keith Poole

Not when it started, because he was just a consultant being employed.

If we look at the invoices, it was a direct discussion between Ms Kerins and Mr. Flannery on this particular work that was done.

Mr. Keith Poole

Yes.

Looking at the invoices, what was the purpose of it?

Mr. Keith Poole

It seems to have been for international representation for the organisation. It seems to have been for lobbying or representing the organisation on certain issues, particularly the charitable lotteries fund, and then assisting with other items in some of the subsidiary companies.

There have been reports that conferences were attended through various European and global disability organisations. Would these have come across Mr. Poole's desk as financial controller?

Mr. Keith Poole

In what way?

In terms of approving the cost to attend these conferences.

Mr. Keith Poole

The cost of the conference probably did not come across my desk.

We are talking about costs of €12,000 to €16,000. Does that ring a bell?

Mr. Keith Poole

Does Deputy O'Donnell mean the fees that are paid to those organisations?

Mr. Keith Poole

I apologise. I did not understand the question. I would have seen those costs over the years. I do not approve every invoice. If the chief executive or another colleague approves an invoice, it gets processed.

Could an invoice be agreed without it going before the financial controller?

Mr. Keith Poole

With a €188 million of turnover, the answer is "Yes".

Mr. Keith Poole

I do not have the delegated authority at the moment, but it would be roughly €50,000.

Any cheque that is written to a value below €50,000-----

Mr. Keith Poole

They are not done by cheque. We do not pay by cheque anymore.

It is academic how they are done, but is Mr. Poole saying that-----

Mr. Keith Poole

All payments will be approved by a financial controller, so there are more than me in the organisation.

Do they report to Mr. Poole?

Mr. Keith Poole

Yes, they do.

Are there financial controllers in each company?

Mr. Keith Poole

Absolutely.

What is their limit?

Mr. Keith Poole

I cannot say off the top of my head.

Would it be €50,000?

Mr. Keith Poole

Yes, I would say so.

At what level would the financial controller have to approve a payment?

Mr. Keith Poole

I do not have that information to hand.

Did the CEO have the authority to approve any payments unilaterally?

Mr. Keith Poole

Yes, she would approve invoices unilaterally and the payments would be seen by two people once they were made. One would see a list of all the payments being made-----

I accept that but if an invoice came in for an amount below €50,000, or any level, could the CEO unilaterally approve that payment?

Mr. Keith Poole

She could approve an invoice.

Could Mr. Poole override that payment?

Mr. Keith Poole

Yes, if I had a difficulty with it. If I saw the listing of the payments and saw something very unusual and did not recognise it, I would question it, yes, absolutely.

Has Mr. Poole questioned them over the years?

Mr. Keith Poole

I have questioned nothing in respect of Ms Kerins but yes, I would have, of course.

Ms Kerins had that authority.

Mr. Keith Poole

Yes.

Mr. Kerr said the response of the Rehab board "to recent political and public demands for information has been inadequate ... we have not exercised strict and appropriate oversight of certain issues". Does Mr. Poole believe now, looking back, that the corporate governance structures within Rehab were lax?

Mr. Keith Poole

I would not say we were lax in respect of looking at spend, absolutely not. Hindsight is a great thing. In respect of these invoices to which the Deputy refers, Frank was a director and that should have gone through the board. I agree absolutely. I do not, however, accept we are lax in any way in regard to monitoring our spend.

I will move on to Rehab’s foray into the coffin business and Complete Eco Solutions. Rehab has provided a lot of documentation and minutes of meetings and so forth. Mr. Poole would have been aware of this. How did this arise? What is the background to it? Was Mr. Hogan involved in it too?

Mr. Keith Poole

No it was a Mr. Horgan.

Mr. Keith Poole

No. It is correct. Mr. Horgan and Mr. Hogan.

No I mean in the-----

Mr. Keith Poole

In the audit committee? Yes, absolutely. I apologise.

There is a good deal of confusion in this area. Once again we are trying to ensure public funds were not put at risk. Could Mr. Poole give us a brief overview of it? Mr. Hogan might also tell us about his overview.

It appears that Ms Kerins’ family was involved and Mr. Flannery was a director. Will the witnesses tell me how it arose and how Rehab decided not to pursue it. They have provided a fairly detailed note on it. Has Mr. Poole come back to us with the figures on the balance of the income for the main company? Has he been able to locate that information?

Mr. Keith Poole

Not yet, but I will.

Perhaps Mr. Hogan will give us an overview. It arose at the audit committee where Ms Kerins stated that her family was involved. Was that the first occasion on which Mr. Hogan became aware of that?

Mr. Liam Hogan

On a point of clarity, there is a Mr. Horgan involved in this and a Mr. Hogan.

The witness is Mr Hogan, on the audit committee.

Mr. Liam Hogan

I am Mr. Hogan. I was chairman of the audit committee at that time and still am. It was brought to my attention and there is a copy of a board minute here, dated 25 March 2010. Does the Deputy have a copy of that?

Mr. Liam Hogan

That is when it arose. There is a heading, Current Priority Issues. The main issues facing the audit committee are under this heading. The Deputy can see this was the only one discussed at that time because it was the top issue. The detail is there about the coffins and the involvement of Ms Kerins’ family, her brother and her husband. The Deputy can see the discussion that went on and the internal auditors involved. This was professionally done.

I appreciate that but I asked a straightforward question. Was this the first occasion on which Mr. Hogan became aware that members of Ms Kerins’ family were involved?

Mr. Liam Hogan

Yes.

Mr. Keith Poole

She declared her interest to the main board in November 2009. The Deputy asked me for some context and I wanted to give that to the committee. The particular business in Kilkenny – I do not know if the Chairman is familiar with our location in Kilkenny – lost €146,000 in 2007. In 2008 it lost €165,000. In 2009 it lost €346,000. This is in our social enterprise. In 2009 it had 29 employees, 17 of whom were people with a disability. The issue was to try to replace income.

I was not personally involved in sourcing coffins or anything to do with coffins, there was a priority to try to do something to save these jobs in Kilkenny. That was the issue that drove this. With the 20:20 vision of hindsight, one would not have done what we did but we were desperate to get something into that centre that would generate some money. That is when the coffin idea emerged.

Why did Rehab not do the coffin idea directly? Why did it go through Complete Eco Solutions?

Mr. Keith Poole

I cannot answer that question because I genuinely was not involved.

Who made that decision?

Mr. Hugh Governey

My name is Hugh Governey and I am now the chairman of Rehab Enterprises. I was on the board at that time. I refer to the letter we wrote to Ms Maguire in response to the committee’s letter of 4 March. Item No. 10 in that letter deals with the involvement with Complete Eco Solutions.

Complete Eco Solutions was a company based in China, apparently. Its name is not in any way connected with coffins. It is a company in which Ms Kerins's brother was an active director and shareholder. This opportunity came from one of our employee directors at the time within Rehab Enterprises to import coffins from China. The connection was made through Ms Kerins's brother.

Did that go through Ms Kerins?

Mr. Hugh Governey

Yes, it went through Ms Kerins. From the outset, when the executive asked Ms Kerins if she would have any objection to Rehab asking for help from her brother, who had significant business interests in China, she agreed on the basis that the matter was brought to the Rehab group board for approval and that was duly done.

What was the first connection made with Ms Kerins's brother in Complete Eco Solutions? How did it first arise?

Mr. Hugh Governey

To be perfectly honest, I do not know.

That is the key. It is like writing a book and forgetting about chapter one and moving on to chapter four. It does not work that way. The board must have been aware of the connection when it considered this. Did it come from Ms Kerins?

Mr. Hugh Governey

I do not recall that it came from Ms Kerins. It came through Ms Kerins.

Were any public funds put at risk?

Mr. Keith Poole

No, it was all in the company, Rehab Enterprises. To put it in context, the money that was lost on this project because it did not work - let us be honest, it did not fly - was of the order of €80,000.

I direct this question to Mr. Kerr and probably to Mr. Poole. Has all that has happened in terms of the damage that has been done to the charities sector, much of which is related to people not coming forward to deal with the issues at hand, impacted on the fund-raising activities of the Rehab Group?

Mr. Keith Poole

I can take that question. Yes, of course it has, particularly in our joint venture with The Care Trust, which is the CRC. Therefore, to a certain extent, it is a double whammy. I know staff are taking a lot of heat at the front, and we all are personally. There was a photograph of my house in a Sunday newspaper. I never thought I would see that day.

How does Mr. Poole feel personally about it?

Mr. Keith Poole

I feel-----

Does Mr. Poole feel any level of responsibility?

Mr. Keith Poole

I am a senior manager in the organisation and I do. I have always been quite happy to disclose my salary - €152,664. I have been in the organisation a very long time. It is my career, if you like. Sometimes I feel angry and sometimes I feel disappointed. I have only met the man on two occasions but I have been hugely impressed by Mr. Molloy. From the messages he is giving, he does not seem to be a man who will just write a report and throw it on a desk or anything like that. I believe, and it is my fervent wish, that Rehab will change, and I think that is what we have to be allowed do. That is how I feel.

Were Ms Kerins and Mr. Flannery asked to step down and fired or did they do it of their own accord? What view did the board take?

Mr. Brian Kerr

Of their own accord.

Did the board see it as being in any way necessary with regard to the difficulties arising in terms of the public view? The Rehab Group has fantastic workers. It provides a fantastic service on the ground. In such cases, it often involves one or two people, and that is what has happened here, who probably have done great work over the years. Did the board not feel it necessary to bring in Ms Kerins as CEO? It seems circumstantial. She effectively finished up her job a couple of days before this hearing.

Mr. Brian Kerr

I can tell the Deputy that she was under such stress and strain that she was very ill. I saw it with my own eyes.

I hope she recovers.

Mr. Brian Kerr

The stress has been absolutely total on her and on her family. It is just terrible.

In terms of what has happened, in that it is contradictory, how does Mr. Kerr believe the board did not act to exercise "strict and appropriate oversight of certain issues"? How does that relate to the statement he just made?

Mr. Brian Kerr

Time marches on and, from time to time, things change. One could see a strain in Angela and-----

What does Mr. Kerr mean by the statement that "we have not exercised strict and appropriate oversight of certain issues"?

Mr. Brian Kerr

The board could have been more diligent in its performance in that way.

Mr. Declan Doyle

May I come in on that? There are four specific issues on which we think we did not exercise sufficient oversight. With the benefit of hindsight, with regard to the coffins business, and the Deputy can ask more questions about that, we should, perhaps, have been more alert to the potential for a conflict.

With due respect, Mr. Doyle, that is an understatement.

Mr. Declan Doyle

May I carry on? The second issue is in respect of directors receiving fees while acting as directors. This was published in the annual accounts. It was public knowledge. It should not have happened. We have taken a decision already that this will not happen ever again. In respect of the duration that a number of us have been on the board, 26 years is a long time. That is not for want of trying at times to move on and allow change, but I have been requested by the chairman to stay on-----

Mr. Brian Kerr

And by me.

Mr. Declan Doyle

-----and by Brian. We lost a number of board members in recent years due to deaths, and we have a number of new board members coming on. We should have been more diligent. We should have been better on that. In terms of the remuneration committee, clearly, with the benefit of hindsight, we should have paid more attention to the charity and not-for-profit sector rather than focusing exclusively, as we did, on a general industrial benchmark.

How did the remuneration committee allow a bonus payment to be paid to a number of the directors in 2012 when, clearly, from a functioning viewpoint, the turnover was down across various categories in the companies in the Rehab Group? A cut in salaries was introduced across the spectrum for ordinary staff members. How did the remuneration committee allow that in 2012?

Mr. Declan Doyle

These staff members - the GMT the Deputy has described - had done exceptionally good work within an international remit in difficult circumstances, and I think they were only paid those bonuses because they had achieved them and they had delivered exceptional service against predetermined key performance indicators, specific objective-----

What about all the other people working in Rehab who were taking pay cuts in 2010?

Mr. Declan Doyle

Those GMT people also took pay cuts.

They got a bonus in 2012.

Mr. Declan Doyle

They got a bonus but they deserved it because they worked exceptionally hard.

I think Mr. Doyle is slightly delusional about that given the current environment. My final question is when was Ms Kerins, the CEO, last paid a bonus.

Mr. Declan Doyle

I think the Deputy understands that I am not at liberty to discuss anything about Ms Kerins, her terms and conditions, or anything like that.

A great pity. It does the organisation-----

Mr. Declan Doyle

But the Deputy understands that.

I do, but it does Rehab no service, nor does it do any service to the public, who provide funds towards Rehab, the service users or the staff. It is not a good day for Rehab. It is extremely important that Ms Kerins and Mr. Flannery take the opportunity to clarify these points before our committee in the interests of Rehab and the wider charity sector.

Can I clarify a question Deputy O'Donnell asked in regard to Laragh Consulting and the payments? Mr. Poole might go down through the years for me. He said that Laragh Consulting was not a company that was operating. It was not registered.

Mr. Keith Poole

It had been dissolved.

What about 2007?

Mr. Keith Poole

I checked in January 2013. That is the first time I checked it, so I do not know the history of Laragh Consulting.

No, but Mr. Poole has the history of payments here.

Mr. Keith Poole

I do, yes.

In 2007, you made a payment of €40,000-----

Mr. Keith Poole

Yes.

-----to Laragh Consulting.

Mr. Keith Poole

Yes.

Was that correct? Has Mr. Poole checked back on that?

Mr. Keith Poole

In other words, did the company exist at that time?

Mr. Keith Poole

I have not checked back, but my point was why did it come across-----

Let me finish on this. Mr. Poole did not know that in 2007. In 2008, did you know?

Mr. Keith Poole

No.

In 2009?

Mr. Keith Poole

No.

In 2010?

Mr. Keith Poole

No.

In 2011?

Mr. Keith Poole

No.

In 2012?

Mr. Keith Poole

No.

In 2013, you found out.

Mr. Keith Poole

January 2013, yes.

Why, in 2013, was that the largest amount that was paid to Laragh Consulting?

Mr. Keith Poole

That was the people who were signing invoices.

Mr. Keith Poole

That was the people who commissioned the work. I did not commission the work, so I cannot answer that.

Who commissioned the work in each of those years?

Mr. Keith Poole

Ms Kerins and two former colleagues.

Who were the two former colleagues?

Mr. Keith Poole

One was Mr. Andrew Conlan-Trant, who has left the organisation. He was a director of training in the United Kingdom. There was also the director of Rehab Enterprises.

Who was that?

Mr. Keith Poole

Mr. Seamus Clancy.

Can Mr. Poole identify for us the heading under which the work-----

Mr. Keith Poole

I have already done that as best I can in my replies to Deputy O'Donnell.

I know you have, but I am asking you now-----

Mr. Keith Poole

Sorry.

-----for clarity in relation to all those years. What was the specific piece of work in 2007? I know you answered Deputy O'Donnell on this but it was general.

Mr. Keith Poole

Yes.

What I want to find out is what that work was in each of those years.

Mr. Keith Poole

Yes. I have not got that to hand today. I have not gone back through every year.

Mr. Keith Poole

I have gone back through a couple of years and had a look at the general headings on the invoices.

I know he does not have it to hand but Mr. Poole might just give the committee the general headings on the invoice for each of those years, in order that members get a sense of what work was being undertaken in the context of that consultancy for that year.

Mr. Keith Poole

Okay, as best I can.

Yes. For how many years has Mr. Poole been there?

Mr. Keith Poole

Since 1996.

As best he can for the years he was there, which include 2007 and onwards.

Mr. Keith Poole

I appreciate that.

Mr. Keith Poole

Yes, I understand that.

In respect of 2011, I refer to note 26 in the accounts. It states here that Frank Flannery is a director of Laragh Consulting.

Mr. Keith Poole

Correct.

It states that he received €11,000.

Mr. Keith Poole

Yes, because what is disclosed is since the date of appointment as a director.

That is, what is disclosed at that point.

Mr. Keith Poole

Yes.

So prior to that is where the balance is.

Mr. Keith Poole

Exactly.

As for the approximately €1 million Rehab received from the United Kingdom, where is that in Rehab's accounts?

Mr. Keith Poole

It is not, in that it comes across in consolidation. It is a transfer from one company to another within the group so-----

Was this a sum of €1.2 million?

Mr. Keith Poole

Yes, I think that was the figure.

How does the group in the United Kingdom describe this amount?

Mr. Keith Poole

It is gift aid, effectively.

It is a gift.

Mr. Keith Poole

Yes.

The group in the United Kingdom describe it as a gift, it enters Rehab's accounts but is not shown specifically in those accounts.

Mr. Keith Poole

No, because the top entity does not have a separate set of accounts. Effectively, it is in the consolidation.

Okay. In the context of the other entities under the top one, how much do they give in? What is the charge each year? Is it in excess of €1 million for each of these entities?

Mr. Keith Poole

Sorry, does the Chairman mean the ones that are not in Ireland?

No, the ones that are in Ireland and that appear under Rehab's-----

Mr. Keith Poole

The Chair has that information there.

It is €4.2 million from each one of them.

Mr. Keith Poole

No, that is combined.

I know it is combined but from-----

Mr. Keith Poole

They are listed there.

Yes, Rehab is in receipt of these and they would be in receipt from the Central Fund.

Mr. Keith Poole

Absolutely, yes.

Consequently, one will find money from the Central Fund in each of the headings here.

Mr. Keith Poole

Yes.

The National Learning Network and all of those receive taxpayers' money.

Mr. Keith Poole

Yes, for shared services provided.

They receive taxpayers' money.

Mr. Keith Poole

Absolutely, yes.

And then out of each of these entities, which receive taxpayers' money, a sum is paid in management fees to the Rehab Group-----

Mr. Keith Poole

Yes.

----- totalling €4.2 million.

Mr. Keith Poole

Yes.

Therefore, would Mr. Poole agree there is a content of ----- or how would he describe that money? Is it not taxpayers' money?

Mr. Keith Poole

It absolutely is taxpayers' money.

Taxpayers' money goes into the entity that pays out all these salaries.

Mr. Keith Poole

Yes.

Including Ms Kerins.

Mr. Keith Poole

Yes.

That is a fact.

Mr. Keith Poole

Yes.

Lastly, on the coffins issue, while I will come back to this again I seek clarification for the present. Complete Eco Solutions brought in the coffins. Who within Rehab was responsible for that whole enterprise?

Mr. Keith Poole

At the time, it was a man named Mr. Horgan.

To where did Mr. Horgan then go? To whom did he report directly?

Mr. Keith Poole

Ms Kerins.

He reported directly to Ms Kerins.

Mr. Keith Poole

Yes.

His duty in part was the coffins.

Mr. Keith Poole

No, his duty was the whole of Rehab Enterprises.

Yes but within that, he had a duty to do with the coffins.

Mr. Keith Poole

Yes.

What happened to Mr. Horgan?

Mr. Keith Poole

He left the organisation.

Was there a question that he questioned issues about the coffins?

Mr. Keith Poole

No, not at the time when the transaction was happening.

Not at that time. Did he at any other time? Is it not a fact that Rehab was in negotiations with Mr. Horgan to leave and that Mr. Flannery acted with Mr. Horgan?

Mr. Keith Poole

No, Mr. Flannery never acted with Mr. Horgan.

Okay. Did Mr. Horgan receive any payment from the organisation in settlement when he left?

Mr. Keith Poole

I cannot reveal that. I am sorry, as I know the Chairman will get frustrated with me, but I cannot really reveal that.

I will not get frustrated with Mr. Poole at all. I said the public probably will become frustrated with him.

Mr. Keith Poole

I understand that.

What was Gandon Coffins?

Mr. Keith Poole

I believe that was just the trade name that was used.

The remainder of the coffins then were sold.

Mr. Keith Poole

Yes, they were.

To whom?

Mr. Keith Poole

I do not know the detail of that.

Did the purchaser pay Rehab for them?

Mr. Keith Poole

Yes, €20,000 to the best of my knowledge.

And they are gone.

Mr. Keith Poole

Yes.

As I have not seen them on sale around, I was wondering where they are.

Mr. Keith Poole

I have no idea.

Mr. Poole should note I intend to come back to some of those questions.

Mr. Keith Poole

Absolutely.

Mr. Hugh Governey

On Complete Eco Solutions, as far as I am aware and as a director at the time, while I do not have perfect recall, the record shows that an executive director, who I expect was Mr. Horgan, came to Ms Kerins with the idea of importing coffins from China. As Mr. Poole already has described, the business in Kilkenny was really struggling at the time and we were doing everything we could reasonably do to keep the business going and keep both the able and the disabled people in employment. I do not know from where the idea came but as far as we are concerned, he approached Ms Kerins, possibly because he knew she had a brother in China. The proposition was put forward about ascertaining whether this could work as a venture for Rehab Enterprises, in which case the coffins would be assembled in Kilkenny. As Mr. Hogan has already alluded and as the Chairman is aware of from the documentation, at all stages Ms Kerins declared her family's interest in the business to do with this particular transaction.

I understand that. However, it also is a fact that when these coffins came in, apparently those who worked for Rehab - and who would have been paid some money from the State - were working on these coffins as part of this Gandon Coffins enterprise. Is that not correct?

Mr. Keith Poole

Yes, it is a wage subsidy scheme, absolutely.

Those employees were being paid from the wage subsidy scheme with taxpayers' money to deal with these coffins. I seek clarification from someone in Rehab in respect of a point. On 16 February 2011, in an edition of Industrial Relations News, there was commentary with regard to an individual who was claiming rights and who subsequently received some settlement from Rehab. I seek information on that issue and I ask Rehab to check it out for me please and to let me know.

Mr. Keith Poole

Of course, yes.

The gentleman present are all welcome and I thank them for their attendance. While it has been stated previously, I reiterate the members' disappointment that neither Mr. Flannery nor Ms Kerins is joining this meeting. The committee very much hopes this can be put to rights and members will see them sometime soon.

I will stick with the coffins if I may and with the permission of Mr. Kerr, I will address this question to Mr. Hogan because from reading the minutes, I understand he might be best placed to deal with the issue. According to the minutes in front of members, on 23 November 2009 Mr. Horgan approached the board and told it there had been discussions with the company with a view to the importation of coffins in order to sell them in Ireland. Ms Kerins made a disclosure at this stage that members of her family, namely, her brother - it is in the minutes in the plural, as "brothers" but it is actually "brother" - and husband have an involvement with this business. This is the note members have to hand, which was signed by Mr. Poole, the company secretary. I ask Mr. Hogan whether Complete Eco Solutions was the company in question with which discussions had been had and to which Ms Kerins was referring?

Mr. Liam Hogan

The background to this is I am not a director in Rehab Enterprises and so it was handed up to the audit committee. That is what the audit committee then discussed, because the matter came before it.

Can I get clarification from someone who was on the board that Complete Eco Solutions was the company in question with which the discussions had been had and in respect of which Ms Kerins made her disclosure on 29 November 2009?

Mr. Brian Kerr

Yes, that is correct.

All right. There is a difficulty with that because Complete Eco Solutions was not formed as a company until 7 December 2009.

If I could have the gentlemen's attention, the actual sequence is that the matter was raised at the board, there was a discussion with persons unspecified here, Ms Kerins made the revelation of a family interest, and the company, according to public records, was formed on Monday, 7 December 2009, approximately two weeks later. Can anyone explain this please?

Mr. Liam Hogan

I was not aware of that. It is not in the minutes here.

It certainly is not. Can any board member explain it? I ask Mr. Kerr.

Mr. Brian Kerr

I cannot explain that.

Is it not odd that Ms Kerins would make a disclosure in respect of a company - I presume it is Complete Eco Solutions, which is the importation body with which Rehab was engaging - that had not yet been formed? I find that bizarre.

Mr. Liam Hogan

Can the Deputy confirm from which source she is getting her information?

It is from the company's records, which are publicly available.

Mr. Liam Hogan

I am taking my information from the extracts of the audit committee meeting.

My first port of call is this document, a certified extract of a board meeting of the Rehab Group of 23 November 2009, which the witnesses distributed to us this morning. We have no explanation for that situation. Is that the case?

Mr. Declan Doyle

Unless that was not the company that was mentioned. I cannot recall the precise details. Can Mr. Kerr?

Mr. Brian Kerr

Not really. Ms Kerins's brother was a trader in China. As I understood it at the time, the company was exporting solar panels from China and it was to be used as a vehicle for the importation to Ireland of the knocked down coffins.

I understand all of that. According to the minutes, however, Ms Kerins advised the board that certain members of her family held shares in the company with which Mr. Horgan had been dealing.

Mr. Brian Kerr

That is correct. I was under the impression that it was a company at the time.

That is what the minutes reflect.

Mr. Brian Kerr

Yes.

Yet at that point Complete Eco Systems did not exist.

Mr. Brian Kerr

I was not aware of that,-----

Mr. Brian Kerr

-----but if the Deputy says so, I accept what she says.

It is not on my say so - it is a matter of public record.

Mr. Brian Kerr

Absolutely.

Either the board was misled, which is a possibility, or Mr. Horgan had been dealing and in communication with another company in which Ms Kerins's family - her brother and her husband - had dealings in respect of coffins. She is not here, so we cannot answer that question. When she is here, presumably she will answer that question.

We have an extract from Rehab's audit committee meeting of 8 February 2010. We have moved on a couple of months. Mr. Hogan explained to the meeting that Ms Kerins had introduced the project, but had withdrawn herself from commercial discussions. However, we have been told today that it was not Ms Kerins who introduced the project. Mr. Hogan's colleague, Mr. Poole, indicated that it was one of the employee directors who devised the notion and went to Ms Kerins with it. Is that a more correct account of how this came to be?

Mr. Liam Hogan

I am reading from the extracts of the minutes of the audit committee meeting of 8 February 2010.

Mr. Liam Hogan

I do not have complete recollection of what happened, so I am working off the minutes. The decisions I made were based on information that I had at the time. I was concerned about whether the disclosure of interests would be a problem if it entered the public domain. I thought that I dealt with it very well. I had the internal auditor in there.

In February 2010, Complete Eco Solutions was established and three months old. Ms Kerins had almost pre-emptively set out her family involvement in it. However, there is no mention in the minutes of a disclosure of Mr. Flannery's interest in the company.

Mr. Liam Hogan

No.

Does Mr. Hogan consider this to be an important fact of which Rehab should have been made aware?

Mr. Liam Hogan

Of course. Ms Kerins was the chief executive. I understood the point of this meeting to be that the chief executive was under suspicion over something that should have been disclosed. What Mr. Flannery was doing with the company was secondary, as I saw the issue. That is why I brought this information to the committee.

Was Mr. Flannery on the board of directors of any of Rehab's subsidiary companies in 2009 or 2010?

Mr. Declan Doyle

He was certainly not on the group board, if that is what the Deputy is asking.

I appreciate that, but what of the subsidiary boards?

Mr. Keith Poole

He was.

From memory, which boards?

Mr. Keith Poole

From recollection, Rehab Lotteries, one of our organisations in the UK called the Chaseley Trust and Momentum, which is in Scotland.

I thank Mr. Poole. Given the fact that he occupied directorships on Rehab's subsidiaries, we can take it that Rehab ought to have been informed of his interest in Complete Eco Solutions.

Mr. Liam Hogan

I agree.

Mr. Hogan is aware that the company had three directors - Mr. Flannery, Ms Kerins's brother and her husband. Sin é.

Mr. Liam Hogan

Yes, but I focused on Ms Kerins as the chief executive.

I appreciate that from the minutes, but I put it to Mr. Hogan that his information was incomplete and that he was unaware of Mr. Flannery's interest in the company. Is that correct?

Mr. Liam Hogan

Yes.

We will move on to a note Rehab has supplied on a board meeting held on 25 March 2010, a month later. It tells us that Ms Kerins stepped out of the meeting. By this point, an order had been placed, the first shipment was due and a website was to be set up. Mr. Poole asked whether the supplier was approached to reduce prices in light of the changed market conditions, etc. To complete the timeline, when did the first shipment arrive?

Mr. Keith Poole

I believe it was shortly thereafter, but I cannot give an exact date.

Was there a second shipment?

Mr. Keith Poole

I do not believe there was, but I cannot be 100% certain.

Were the total moneys paid over to Complete Eco Solutions for that shipment €70,000?

Mr. Keith Poole

Yes.

Somewhere in that region.

Mr. Keith Poole

Yes. That sounds right.

Is that the only money that was paid to Complete Eco Solutions?

Mr. Keith Poole

Yes, I believe so.

Was there a controversy among Mr. Poole's financial controllers over the paying out of that money to Complete Eco Solutions?

Mr. Keith Poole

One of my financial controllers was asked to sign a cheque. He called me and asked whether it was in order.

Did he refuse to sign the cheque?

Mr. Keith Poole

Yes, until he spoke to me.

On what basis was he refusing to sign the cheque?

Mr. Keith Poole

He recognised that there was a connected party.

If Mr. Poole does not mind, I will surmise why that gentleman refused to sign the cheque. Instead of importing materials directly, Rehab chose to use a third party. It looks like a company, namely, Complete Eco Solutions, was formed for that express purpose. Those who had ownership of and an interest in that company were closely related to the then CEO and another was a director of some of Rehab's subsidiaries and its former CEO. Given the run of events, that is what it looks like to me. I will surmise that the financial controller in question suspected or was at least uncomfortable with that scenario.

The organisation's own minutes reflect the fact that there was the potential for reputational damage to Rehab, given the close connections of the CEO with this enterprise. Do the witnesses, and Mr. Kerr as chairman in particular, now accept that it was, to say the very least, ill advised for the board of Rehab or any of its committees to have given consent to this transaction and operation?

Mr. Brian Kerr

I accept that.

I may come back to that but I shall move on because I am conscious of the time constraints. Mr. Poole confirmed in his opening statement that no remuneration was ever paid to a director of the Rehab Group board in respect of his or her duties. I ask him to clarify what he meant when he went on to say that in recent years, certain directors or their firms were paid by Rehab for the provision of professional services, including quantity surveying, publications and editing. Leaving Mr. Flannery aside for one moment, I ask Mr. Poole to tell me who those directors were, the total value of the fees paid to them and the time line involved, if possible.

Mr. Keith Poole

I will have to refer to my file for a second. I can tell the Deputy, with regard to the directors in question, that one was a firm called KMCS-----

Mr. Keith Poole

It is a quantity surveying firm in Rathgar. Mr. Keogh, a former Rehab director, was a partner in that firm but he absolutely stood aside from any work with Rehab. We just used his firm which did a lot of big projects at that time. They did a lot of significant building-----

He was a director at the time of the awarding of that contract.

Mr. Keith Poole

Yes he was a director of the Rehab Group.

Mr. Keith Poole

Mr. Gene Lambert, a director of Rehab, was involved in a publication called Insight, an attachment to The Irish Times which is published on a quarterly basis.

I am familiar with that title.

Mr. Keith Poole

He was an adviser on editorial content and so forth.

Mr. Keith Poole

No.

Just those two gentlemen. Does Mr. Poole have the figures for the value-----

Mr. Keith Poole

I will get them.

Fine. We have the detail of Mr. Flannery's payments. While Mr. Poole is seeking out those figures, I wish to draw the attention of the other witnesses to Rehab's memorandum and articles of association and specifically, to clause 4. I do not know if the witnesses have this document with them but I will read out the relevant section because it makes for interesting reading. Clause 4 states that "no member of the company's board, group of directors or governing body, by whatever title called, shall be appointed to any salaried office of the company". That goes to Mr. Poole's explanation of why he is not on the group board. It goes on to say that no remuneration or other benefit, in money or money's worth, shall be given by the company to any member of the board, to the directors or the governing body. It makes it clear that the practice is that directors serve in a voluntary capacity. It goes on to say that an exception can be made in terms of members of the group board of directors but only where that member holds not more than a 1% part of the capital of the company in question. In other words, it is allowable, according to Rehab's memorandum and articles of association, but only when the threshold of involvement of the board member is very low.

Perhaps Mr. Poole will tell me, or can I surmise that in the case where payments were made to members of the board of directors, their interests in the companies concerned exceeded that very modest threshold? Would I be correct in saying that?

Mr. Keith Poole

Regarding payments made to Mr. Lambert - I have the figures here - in 2013, the sum was €8,000, in 2012 it was €12,000 and in 2011 it was €5,000. Those sums were paid to him, in his own name so Deputy McDonald is absolutely correct.

Mr. Keith Poole

I am not familiar with the partnership arrangement but yes, technically ---

It would be in excess of the threshold?

Mr. Keith Poole

Yes but those amounts were genuinely for quantity survey services provided by that firm.

Just so we are clear, I am not questioning the genuine need for the service or the delivery of that service. I am not casting any aspersions in that regard. What I am pointing to here is that the individuals concerned were directors of the group and I am asking, to cut to the chase, did Rehab break its own rules?

Mr. Declan Doyle

Mr. Poole might agree that there was a little bit of ambiguity because the articles of association, at clause 37.1, state that a member of the group board of directors who is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the company "shall declare the nature of his or her interest at a meeting of the group board of directors" at which the question of entering into the contract or arrangement is first taken into consideration. This implies, although it is not explicit, that they could be there. That said, Deputy McDonald is right. Quite clearly, no director should be in receipt of fees in respect of any other activity. However, the aforementioned clause did introduce an element of ambiguity and perhaps-----

Without getting into a clause by clause debate on the issue, I would not share that analysis. I would put it to Mr. Doyle that Rehab was in breach of its own rules in awarding work to members of the group board. More astonishingly then, when it comes to Mr. Flannery - and I hope he does not get overly exercised at the mention of his name - we discover that Rehab consistently made payments to Laragh Consulting, even though it was dissolved in 2009. Mr. Poole said that he only discovered that this was the case in January 2013. What prompted him to go and check at that stage?

Mr. Keith Poole

I was doing the disclosure note for the accounts and ---

Did Mr. Poole not do a disclosure note for previous accounts?

Mr. Keith Poole

I did but to be honest, the amount that was being disclosed in 2011 was smaller, so-----

In 2011 it was €51,000 and in 2012 it was €66,000.

Mr. Keith Poole

No, in 2011, it was-----

Of course, in 2011, it was €11,000. Pardon me. In 2012 it was €66,000.

Mr. Keith Poole

Yes, and I was doing the 2012 accounts and the disclosure note and decided to check it.

So the 2013 payment was made to Mr. Frank Flannery directly.

Mr. Keith Poole

Yes, everything from that date in January was-----

According to Ms Kerins's correspondence, Mr. Flannery took on this work on request. He was not lobbying for the work but took it on because he was asked to do so by Angela Kerins. Is that what happened?

Mr. Keith Poole

If she says so, yes.

I am sure that all of the witnesses would appreciate that this was not at all appropriate, not least because Laragh Consulting was a busted flush by 2009. Am I right?

Mr. Brian Kerr

It would appear so.

It does not appear so. It was so.

Mr. Brian Kerr

It would appear so.

No, it is not a matter of appearances.

Mr. Brian Kerr

I am not arguing-----

It was dissolved in 2009. That is a statement of fact.

Mr. Brian Kerr

We were not aware of that fact at the time.

Would Mr. Kerr not categorise that lack of awareness as lax? That was lax, was it not?

Mr. Brian Kerr

Very definitely.

The company was not doing its due diligence or its homework.

Mr. Brian Kerr

Yes, I would agree. That would seem to be the case.

What did the auditors say when Rehab discovered that this company had been dissolved since 2009? How was that news broken to the auditors?

Mr. Keith Poole

It was disclosed. The auditors did not have any reaction because the disclosed payment was made to the entity.

On the issue of lobbying, it has come to my attention that irelandfirst.ie, was set up in January 2011. It is a lobby group composed of the great and good of Irish society and is concerned with political reform. Rehab registered the domain name irelandfirst.ie. Were the witnesses aware of that? It is a matter of public record that the person who registered the name on behalf of Rehab was a Mr. Robert Younger. Does that ring a bell?

Mr. Brian Kerr

I am not aware of that.

Are any of the delegates aware of it?

Mr. Keith Poole

Mr. Robert Younger is an IT manager in Rehab.

Was Mr. Poole aware that he is the person who registered the domain name irelandfirst.ie on behalf of the Rehab Group?

Mr. Keith Poole

I was not aware.

Was the board aware of it?

Mr. Brian Kerr

I never heard about it.

However, it did happen. I am not casting any aspersions on the motivations of those associated with irelandfirst.ie; I am sure they are entirely honourable. However, is it appropriate for the Rehab Group name to be associated with that group and its IT manager, Mr. Younger, to be taking the time and trouble to register the domain name?

Mr. Brian Kerr

It would be nice if the board knew about it.

I put it to Mr. Kerr that the board absolutely should have known about it. I am conscious that I might be introducing new information of which the witnesses clearly were not aware. I am asking them to investigate this matter and give a report to the committee as to how it came to be.

Mr. Brian Kerr

We certainly will do so.

On the issue of pay, I was glad to hear Mr. Doyle say that it would be good practice in respect of benchmarking pay rates for Rehab's senior executives to look to his own sector rather than private industry.

Mr. Declan Doyle

I was making an observation about the benefit of hindsight. To put the situation at Rehab in context, over the years we have moved from being a very small organisation to quite a large one. Initially, Rehab ran sheltered workshops, which was a largely commercial endeavour in the sense that one had to go out and sell one's services to commercial industry. We have always seen ourselves as a commercial not-for-profit organisation rather than a pure charity, even though we were always involved in a huge range of charity activities. I can remember doing pub quizzes and church gate collections in Limerick and all the kind of stuff that is associated with the local committee. Nevertheless, the general industrial benchmark was, in our view, appropriate for an organisation which had a growth mandate, was seeking generally to internationalise its business and had unique services which we felt we could offer outside Ireland. It seemed to me at the time a very sensible way to go and, therefore, we did not look to our sector. Of course, we should have done so.

I hope the message has been received and understood that the world outside of Rehab does not believe that is the way to go.

Mr. Declan Doyle

That message is received. The world has changed, we have changed and it is not the way to go. We will be looking at the issue very carefully.

Does Mr. Doyle regard public sector pay standards and norms to be an appropriate benchmark for Rehab's senior management?

Mr. Declan Doyle

We would have to look at the public sector as well as at charities similar in size and scale to Rehab in the United Kingdom and wherever else we can find them in terms of setting an appropriate level of remuneration for the senior management team and the new CEO.

I am sure Mr. Doyle is aware that other charitable organisations look to their own charitable sector and to the public sector in setting pay rates. That would be considered good practice.

Mr. Declan Doyle

I understand that.

In regard to the pension regime within Rehab, what is the qualifying age for an employee to draw down his or her pension?

Mr. Brian Kerr

It is 65 years of age at the present time.

Mr. Keith Poole

To clarify, in a defined contribution scheme, one can retire from age 50 onwards.

Does that currently apply to Rehab's scheme?

Mr. Keith Poole

Yes.

One can retire at 50, but can one draw down one's pension at that age?

Mr. Keith Poole

An employee who leaves our employment can draw down his or her pension.

Am I right in assuming that CEOs or any other person, on leaving Rehab's employment, draw down their pension?

Mr. Keith Poole

Yes.

Was that the case when it was a defined benefit scheme?

Mr. Keith Poole

Members of a defined benefit scheme can seek early retirement with the permission of the trustees.

Does Rehab have an early retirement programme?

Mr. Keith Poole

Not really.

There is no early retirement scheme?

Mr. Keith Poole

Before the scheme got into difficulty, one could retire early with the permission of the trustees.

Can Mr. Poole recall whether any former CEO retired early with the permission of the board?

Mr. Keith Poole

There are only two former CEOs. I do not want to breach the advice we have received in this regard. There are three CEOs in Rehab's history.

Have any of those CEOs retired with the permission of the board?

Mr. Declan Doyle

I am not sure we can go there.

Let us say I am working for Rehab. I hit 50 years of age and, for whatever reason, I decide to leave. What do I get? Is it my pension entitlement in accordance with my contributions to date?

Mr. Keith Poole

What one gets in a defined contribution scheme is what can be bought. If the Deputy were working for us and she decided to retire at 50-----

I would like to point out that it is a long way off.

Mr. Keith Poole

----- there would be a sum of money in a separate trust that is nothing to do with the company. That money can be used to buy an annuity for her pension. It would all depend, in a defined contribution scheme, on the date of going to the market to buy the annuity as to exactly what pension the Deputy would receive.

Would I get a lump sum?

Mr. Keith Poole

Under tax rules, one can take a lump sum from one's pension scheme. It is not a matter for the employer to decide.

Would I get anything additional if I were a member of Rehab's senior management team?

Mr. Keith Poole

There is nothing written down on that.

Is there a point of difference in terms of the pension arrangements as between the senior management team which Mr. Doyle deals with and other staff members? Are there additional bells and whistles for senior managers?

Mr. Declan Doyle

The pension schemes are exactly the same.

Mr. Keith Poole

I am in the exact same pension scheme as everybody else.

Mr. Declan Doyle

Everybody is in the same scheme.

That includes the chief executive officer, whoever he or she may be?

Mr. Declan Doyle

Absolutely.

Has there ever been a practice of beefing up a person's package with additional moneys when he or she is leaving Rehab's employment?

Mr. Declan Doyle

As far as I am aware, people can pay certain payments into ERF's. One can make advance pension payments as an individual if one wishes to through a pension scheme make additional pension payments if they so choose.

Mr. Keith Poole

Anything one does in that regard is in line with pensions regulations.

Yes, but am I correct in saying that even in the case of a defined contribution scheme, there is a managerial discretion to make additional payments into the scheme?

Mr. Keith Poole

Any employer can make a contribution to a defined contribution scheme before the person leaves employment.

Over and above the 6%?

Mr. Keith Poole

Any employer can make a contribution.

Has Rehab done so ?

Mr. Keith Poole

Historically, we have done so in respect of the defined contribution scheme.

Mr. Keith Poole

Yes.

Has that been done recently?

Mr. Keith Poole

Not to my knowledge. There are people who leave. I am not going to be drawn into this type of question.

Mr. Poole knows what I am getting at.

Mr. Keith Poole

I understand what the Deputy is getting at. She asked me if it has been done for people, and the answer is "Yes".

It has been done for people, but Mr. Poole cannot specify exactly whom.

Mr. Keith Poole

I am not saying whether or not it has been done for Ms Kerins.

Regarding charitable donations, will Mr. Poole tell me about Rehab Foundation?

Mr. Keith Poole

Rehab Foundation is an entity that acts as an agent to collect money for the Rehab Group.

Is it in charge of Climb Kilimanjaro and those types of initiatives?

Mr. Keith Poole

Yes.

There is also the Five Peaks Challenge, 1 Day for Rehab and the People of the Year awards. Does the latter make money for Rehab?

Mr. Keith Poole

It does, assuming we can keep our sponsors.

Outside of the lottery funding - we will park that for a moment - what is Rehab's income in terms of charitable donations associated with these events?

Mr. Keith Poole

I do not have that information to hand but I can get it for the Deputy.

Is there any chance Mr. Poole can get it in the course of this meeting?

Mr. Keith Poole

I will see if I can.

The money from those donations comes into the Rehab Foundation.

Where does it go? Does it go on up to the group?

Mr. Keith Poole

Yes, if it is specific. A number of years ago we put in place a system whereby if there is a centre in Lifford, or wherever the centres are, if it raises money it all goes back to the centre.

But I presume for the flagship endeavours such as the Five Peaks Challenge-----

Mr. Keith Poole

The proceeds of the Five Peaks Challenge go to a specific project which is related to suicide prevention.

What about the People of the Year event? I assume that a pot of money from the charitable donation finds it way into the group.

Mr. Keith Poole

Yes.

Could Mr. Poole provide a figure for that as soon as he can? Would those moneys also pay in part for the salaries of the group staff?

Mr. Keith Poole

Yes, it goes into the pot of money that I described earlier.

It goes into the pot. In the pot of group money there is a mixture or blend of taxpayers’ money, charitable donations that come though the foundation, and I presume proceeds from Rehab’s commercial activities.

Mr. Keith Poole

That is correct.

Could we have ratios for how the money is divided?

Mr. Keith Poole

I do not have them to hand at the moment.

That is okay, but could Mr. Poole work them out for us? It seems to me that Mr. Poole has confirmed that taxpayers’ money goes to the group and the group in turn pays the salaries, which he will be aware from public reaction the average reasonable person believes to be excessive. That is not news to Mr. Poole. He is aware of that. In addition to money from the taxpayer, there is money from charitable donations going into the blend as well. Was it not wrong for anyone, including the most recent CEO, to come before the committee and say she was not paid by the taxpayer, that she was paid by moneys streamed from commercial ventures? Was that not factually wrong? Mr. Poole is probably best placed to answer.

Mr. Keith Poole

I guess it depends on how one defines where the money comes from. To be fair to the former CEO, one could take a chunk of money and say that is what pays my salary or one could look at the whole pool of money.

But one has no option but to look at the pool of money in terms of how one manages one’s financial affairs.

Mr. Keith Poole

I would agree with Deputy McDonald on that.

Mr. Poole agrees with me.

Mr. Keith Poole

The whole pool of money is used to pay people, other than the specific cases where we recharge down to the-----

I have that. Does Mr. Poole agree with me that it is inaccurate or that an argument cannot be sustained by someone employed by the Rehab Group – I refer to the CEO – to the effect that she is not paid by the taxpayer and that her salary is purely financed by moneys from commercial effort? Does Mr. Poole agree that is simply not an accurate statement?

Mr. Keith Poole

It is her interpretation.

I am not asking for her interpretation. I am asking Mr. Poole for a statement of fact and for his view.

Mr. Keith Poole

In my view the pool of money that comes in pays all our salaries, and that includes the money from the public service, the charitable money to which Deputy McDonald referred and other commercial income.

Could we have a breakdown of the amount?

Could we have the ratios of the amounts?

Mr. Keith Poole

Yes.

I will leave it at that for the moment but I might come back in.

The witnesses have requested a break. We will take half an hour – Irish time.

Sitting suspended at 12.35 p.m. and resumed at 1.10 p.m.

We are now in public session and I call Deputy Ross.

First of all, I thank the Rehab directors for coming in, eventually. The session so far has reminded me more of Hamlet without the princess or the prince, than of anything else. We now have got the witnesses as second best to explain what happened and apologise for not being able to tell us a lot of what we wish to know. That is regrettable and it emphasises the need for us to bring in Mr. Flannery and Ms Kerins even more so because of the witnesses' inability or refusal - or the constraints on them - to answer the questions we wish to know about.

It seems to be quite obvious, and maybe the witnesses can confirm this, that the company or the group was being run by the executive, and that the board was not necessarily in control of what was going on. I do not know whether the witnesses think that is fair. The fact that they have admitted fault is very helpful in that we can identify the problems, although the solution is more difficult.

In view of what Mr. Kerr said, particularly about the lapses which have occurred, can he tell me who is calling the shots at Rehab?

Mr. Brian Kerr

In theory, the board is calling the shots but we leave the actual day-to-day running to the executive.

In practice, would it be fair to say that the witnesses had control of the executives and were vigilant over them in view of what they said themselves about the lapses and faults they had?

Mr. Brian Kerr

We felt that we did have control.

Mr. Kerr felt he did have control.

Mr. Brian Kerr

Yes.

Does Mr. Kerr still think that?

Mr. Brian Kerr

I think we do.

In light of that, what does Mr. Kerr feel about the payments to Laragh.

Mr. Brian Kerr

I think the Deputy has already got an answer to that.

Yes, okay. Does Mr. Kerr feel they were wrong?

Mr. Brian Kerr

I think that if we had delved further maybe we might have taken a different view, but at the time they seemed okay.

What happened when they came to the board?

Mr. Brian Kerr

They did not really come to the board because they were handled by the executive in the way that normal actual consultancy would be. We were aware that there was consultancy going on and that was that.

Was Mr. Kerr aware that Mr. Flannery was being paid large sums of money?

Mr. Brian Kerr

We were aware that Mr. Flannery was involved in the lobbying, yes.

Did Mr. Kerr ask how much he was being paid there?

Mr. Brian Kerr

No. We did not ask, to my knowledge.

He was on the board at the time.

Mr. Brian Kerr

Not all of the time, some of the time.

No, but some of the time. He was being paid money but Mr. Kerr did not ask how much he was being paid.

Mr. Declan Doyle

When he was on the board we knew how much he was being paid because it was declared in the annual report each year.

Yes but before that, one did not ask how much he was being paid.

Mr. Declan Doyle

Prior to that, these were matters that were dealt with directly by the executives.

This was therefore a payment made with the approval of Angela Kerins.

Mr. Declan Doyle

I think that is what Mr. Poole said.

Correct. I am trying to find out who actually is in control of this company. That is why I am asking these questions. So these payments were made by the chief executive, with the approval of the chief executive apart from when he was on the board, unknown to Mr. Kerr.

Mr. Brian Kerr

Yes.

So Ms Kerins was in control of that. On the coffins issue, I think Mr. Poole said that there was a Mr. Lombard who was reporting on that issue, and he was reporting to Ms Kerins as well, is that right?

Mr. Keith Poole

Mr. Horgan.

Sorry, Mr. Horgan. I apologise. He was reporting to Ms Kerins as well.

Mr. Brian Kerr

Correct.

So, in effect, the control of both of those was in the control of the executive and really at arm's reach from the board, at best.

Mr. Brian Kerr

At arm's length, yes.

Mr. Kerr still thinks he was in control of the company.

Mr. Brian Kerr

Yes.

How was the attendance at the 27 February meeting?

Mr. Brian Kerr

How was what?

How was the attendance? Who was to attend? Why did Mr. Kerr not turn up?

Mr. Brian Kerr

Because I was not aware that I was actually invited.

Mr. Kerr called that a miscommunication, is that right?

Mr. Brian Kerr

Yes.

What happened?

Mr. Brian Kerr

I understand there was a request from the committee that the chairman of the remuneration committee should attend. That did not seem to come through. Certainly, I was never aware of that particular situation, so I assumed that all these questions would be answered by the chief executive and those who were on the team at the time.

So they did not tell Mr. Kerr that he was invited.

Mr. Brian Kerr

I was not aware that I was invited.

Was Mr. Kerr kept in the loop about everything?

Mr. Brian Kerr

I thought I was.

It seems to me that if Mr. Kerr was not kept in the loop about being invited to an Oireachtas committee, it is an extraordinary failure.

Mr. Brian Kerr

To be frank, I would not really be rushing to come here if I could avoid it.

Hopefully, we will not have to ask Mr. Kerr again.

Mr. Brian Kerr

Can I write that down?

Mr. Hugh Governey

Perhaps I could address the question very properly raised by Deputy Ross, Chairman?

Mr. Hugh Governey

My recollection of the situation at the time was that we received a formal letter - we, the Rehab Group; I am not sure it was addressed to Angela Kerins - of invitation with the four agenda items at the top of the letter. I think the wording of the letter was something like "inviting Ms Kerins and her officials to attend" and so on. I still have not seen the e-mail but, apparently, subsequently an e-mail was sent to Angela Kerins, I believe. I have not seen the e-mail. I do recall a discussion. I do not recall who else was there for the discussion. The discussion was around who was going to attend the meeting.

The decision had already been made based on the letter which we had received to the effect that the appropriate people to attend were Angela Kerins, as chief executive, and her three senior managers, each of whom had responsibility for one specific item on the agenda. I think I am correct in saying that nowhere in the agenda was there a reference to remuneration. In any event, I recall Angela Kerins mentioning the fact that there was a suggestion - I do not recall exactly what words were used - that the remuneration committee might attend. Ms Kerins said that she had spoken with the clerk about how many were expected from Rehab Group. I believe the clerk indicated something to Ms Kerins in that conversation Again, I am repeating what I understand Ms Kerins said to me. I understand the reason she made the call was to clarify how many people the clerk expected from Rehab Group. The response indicated that because there were people coming from the Department of Justice and Equality, the Department of Social Protection and the HSE and so on, it would be rather crowded and that four or five would be in or around the number. That did not appear to leave room for the chairman and members of the remuneration committee to come and we did not appear on the agenda in any event. I am simply giving my honest recollection of the sort of communication that took place.

Would that be in keeping with what the clerk-----

I wish to clarify this. It is never a question of not having room to accommodate witnesses, Mr. Governey. We will always find space for you. You can always be assured of that. We contacted Rehab and we asked representatives to attend. At the meeting it was perfectly clear whom they wanted to attend and how the witness list should be made up. There is no doubt in our minds that the representatives of Rehab, through the clerk, were made absolutely clear about what was required of them. In fact, at the last meeting, I questioned Ms Kerins on whether she had informed Mr. Flannery. She did not give us a straight answer. It is clear to me that there is no issue in respect of how we issued the invitation, that there was no ambiguity over who we wished to attend and that there is an attempt being made - not by you, but by others - to muddy the waters in respect of the invitation. Let us be clear about it: Rehab and Angela Kerins, through our clerk, knew exactly what was required for that meeting. In my opinion, she decided for herself she would invite who she wished to attend and ignored the wishes of the Committee of Public Accounts. That is the factual position. The commentary from that meeting has been reported through various media outlets. I am not taking issue with you but the whole thing about the invitation and who did or did not know is simply a red herring. It is obvious that Ms Kerins decided for herself who was going to attend.

I made the point at the previous meeting. Perhaps Mr. Flannery was in the House and did not even know he was expected to be before the Committee of Public Accounts. We still have not got to the end of that. In fact, the response from Angela Kerins on behalf of Rehab following the meeting was short of many facts and attempted further to create issues around the basic questions that members were asking. I apologise, Deputy Ross, but I wished to clarify the matter.

I believe the point the Chairman is making - I would probably put it more bluntly – is that, increasingly, in particular since the chairman was not kept in the loop about this, it looks like the board of Rehab was simply a rubber-stamp for the chief executive. That is what it is beginning to look like. It seems she told the board what she felt like telling them. If Mr. Kerr did not know that he was requested to come here when it was absolutely clear that we wanted him, it means that he was being kept in the dark and that the board of Rehab was, therefore, not a proper board but was simply being run by the executive.

I will move on to pay. I wish to ask Mr. Doyle a question. He is chairman of the remuneration committee. Under what code of corporate governance was this committee working?

Mr. Declan Doyle

We had our own articles, as it were. We spelt out the duties that I have summarised for the committee in the presentation.

There was no real code of governance at all. Is that the case?

Mr. Declan Doyle

We took a good deal of advice in or around 2007. We asked our firm of accountants and lawyers to draw up guidelines for the operation of the committee in respect of the overall memorandum and articles of the company. We did that and this spelt out what we should do in terms of our duties in respect of the management team and the chief executive. It combined all the elements one would expect in a remuneration committee.

There was no actual code by which the committee abided. The committee did not abide by any guidelines relating to board membership or length of board membership. I still do not know how, in the name of God, the board re-elected its members or appointed members. How were they appointed? The document states they were elected every year. By whom?

Mr. Declan Doyle

By the board. They were ratified by the board.

By whom was the board elected every year?

Mr. Declan Doyle

It was done by the board at an annual general meeting. Each year, people retired by rotation and were re-elected by the board.

It was self-perpetuating.

Mr. Declan Doyle

Deputy Ross could say that but, in fact, during the past ten years, approximately 50% of the board has been replaced.

How were they replaced?

Mr. Declan Doyle

There was a nominations committee.

Mr. Declan Doyle

It made proposals to the board and the board voted on them.

Therefore, current board members nominated new board members and that was how it went on.

Mr. Declan Doyle

There was quite a mix of board members. They came from all kinds or different walks of life. On our board now there are approximately ten people, of whom approximately five are people from the regions who have been involved regionally with Rehab in fund-raising activities and local community activities. Some of us are Dublin-based. There others who have a particular interest in what we do and in our mission and goal. We are a broad-based board.

There is clearly a problem over length of service. A total of 26 years is a long time to be on a board.

Mr. Brian Kerr

A total of 32 years is even longer.

Mr. Declan Doyle

Yes, 32 years is even longer. That is an issue we are going to address with Dr. Eddie Molloy. I assure the committee that we will be addressing it with dispatch.

Will Mr. Doyle tell the committee something about pay? Ms Kerins told the committee last time that her pay had not been reduced this year. Then, through her solicitor, she issued a letter last night, which, I imagine, the board members have seen, stating that this was incorrect, in other words, that she misled the committee on that. Mr. Doyle can confirm that.

Mr. Declan Doyle

I am not going to be drawn on Ms Kerins but-----

No, but Mr. Doyle can confirm what she says.

Mr. Declan Doyle

If she said it. Did she send the committee a letter?

Does Mr. Doyle agree with her?

Mr. Declan Doyle

I agree with the contents of her letter. Presumably, it is what she said and she is correcting it.

Therefore, it was higher at some stage this year.

Mr. Declan Doyle

I am not going to be drawn down that road. We are all clear about the legal position.

Mr. Doyle is telling me that if that had remained on the record of this committee, he would have said nothing about it.

Mr. Declan Doyle

It is a matter of if I had been asked the question. I will answer the questions I am asked to the best of my ability, but there is a law in this land and we have received a letter from Ms Kerins spelling out her rights and entitlements and I have to respect that.

Mr. Doyle is confirming it was higher anyway. That was incorrect. Mr. Doyle confirmed what she said in the letter.

Mr. Declan Doyle

Deputy Ross does not need me to confirm it. She said it.

Mr. Declan Doyle

Okay, yes.

That is fine. Will Mr. Doyle tell me about bonuses? We have touched on the 2012 bonuses. How can Mr. Doyle justify paying bonuses in 2012?

Mr. Declan Doyle

I think I explained that.

I want to know about the performances. It is all very well Mr. Doyle stating that he believes he explained it but I do not believe he did. What were the performance bonuses?

How can the bonuses be justified? What were the targets set?

Mr. Declan Doyle

The way it works is that each year the chief executive will set out specific achievable targets for the individuals in the different divisions. If they achieve and exceed those targets, they are rewarded accordingly. It would be a measure of service delivery, for example, in terms of the health care, or the number of people placed in jobs and education, and those kinds of things that are relevant to particular areas of responsibility. The chief executive would have submitted to our committee a schedule of payments she deemed appropriate and if the committee agreed, we would sanction them. That is the way it worked.

Did the committee agree to what she suggested in 2012?

Mr. Declan Doyle

With minor adjustments here and there, yes.

Were these upward adjustments?

Mr. Declan Doyle

No.

Downward adjustments?

Mr. Declan Doyle

Yes, in some cases.

These bonuses in 2012 are outrageous at a time when other people were taking cuts and people were being laid off. Did everyone accept a bonus?

Mr. Declan Doyle

Not all staff accepted a bonus, no.

Did everybody at the top accept bonuses?

Mr. Declan Doyle

Are we talking about the GMT?

Mr. Declan Doyle

We have declared what we said and the Deputy has seen the schedule of people who got those bonuses which was provided to the committee. That represents the situation. I do not quite understand-----

I am asking how many people of the top eight did not accept bonuses.

Mr. Declan Doyle

I believe it was about two, or possibly three.

Who did not accept bonuses?

Mr. Declan Doyle

Who did not accept?

Who were they?

Mr. Declan Doyle

I think that information is in the schedule. Is the information about who received bonuses in the schedule received by the committee?

Mr. Keith Poole

There were two of us who did not.

Who were they?

Mr. Keith Poole

Myself and the director of HR.

I ask Mr. Poole why he did not accept a bonus.

Mr. Keith Poole

I did not accept my bonus, I guess, because of the challenges that were facing the organisation, I believed. We had closed some services in Scotland in 2012, we had just wound up the pension scheme, we had made some people in Ireland redundant and none of my staff had received a pay increase for the past five years.

So Mr. Poole did not accept a bonus and neither did the head of human resources.

Mr. Keith Poole

Yes, that is correct.

Everybody else in the general management team accepted a bonus. Is that correct?

Mr. Declan Doyle

They were awarded bonuses because they had worked exceptionally hard and delivered exceptional results. I think it was their right to accept those bonuses just as it was other staff members' right not to accept bonuses. Let us remember that we are talking about a quite successful organisation that has weathered a very difficult time since this crisis began. Our activities are not purely and simply in Ireland. We have international activities in the UK, in Scotland and in England, and in the Netherlands and Poland. These people were in the team managing all that so they had put in exceptional effort.

Two people disagree to the extent that they would not take them.

Mr. Declan Doyle

That is correct. I understand that. They are entitled to their views but the other people were rewarded for work hard earned and well done.

What was the size of the bonuses?

Mr. Declan Doyle

I have one other piece of information. Two of the current members of the GMT were not in their positions in 2013 so they would not have received any bonuses in respect of 2012.

What was the size of the bonuses?

Mr. Declan Doyle

They ranged from €6,000 to €14,200. This information is contained in the pack for the committee.

We have received a redacted version of the Towers Watson report. I ask Mr. Doyle to explain something to me. Is this the hierarchy which exists where the chief executive - who is redacted - gets, I think, €240,000; the director of training and employment services gets €174,000; the director of health and social care services gets €157,000; the director of finance gets €152,000? Is that the hierarchy?

Mr. Declan Doyle

The director of training and employment services is a special case because she took over a huge amount of additional responsibility in that year. We had a director in the UK who left and she took over both the UK and Ireland. The amount reflects an increased level of responsibility and work, hence her salary.

Will it remain at that level?

Mr. Declan Doyle

Pending review. We have to review all this now in light of the commitment I gave earlier today to take account in our next review of the not-for-profit and charity sectors.

What about the director of health and social care services?

Mr. Declan Doyle

All these things will be reviewed.

Why is the director of health and social care services getting more than the director of finance, for example?

Mr. Keith Poole

The salary of the director of care services is €150,000.

It is €157,000 on the list I have here. I am reading from the Towers Watson report. Why would that person be getting more?

Mr. Declan Doyle

If I may correct an error on that schedule. Her salary is not €157,000, it is €150,000. I apologise.

That explains it. I want to ask about the auditors. How long have they been the auditors?

Mr. Keith Poole

They have been the auditors for as long as I have been there and I can go back 18 years.

Mr. Hogan is chairman of the audit committee. Why has he been chairman for so long? Have the auditors been reviewed during this long time? Has the audit been put out to tender?

Mr. Liam Hogan

Yes, we have, within the last couple of years. There were bids from three organisations and PricewaterhouseCoopers retained the audit. The bids were from all the big four auditors. Given its performance it is very difficult to unseat a standing audit. I am quite happy with PwC, as is the board.

Did it come in as the cheapest bid?

Mr. Liam Hogan

I cannot remember but not necessarily. It may have come in the cheapest but I cannot remember the figures. However, that would not be the issue. The issue would have been whether we were happy with it, whether it was independent, whether it was demonstrating independence, and whether we trusted its professionalism.

One of the indications I take from that would be to see whether it gets much in the way of fees from other services in Rehab. Would that be fair?

Mr. Liam Hogan

That is a fundamental point.

Has it not been the case in the past two years that it has got more in the way of fees than it has from the audit?

Mr. Keith Poole

That is not correct. The company's audit fees disclosed in our accounts are at €300,000.

Then I am incorrect. It has been more. I apologise. I will ask Mr. Kerr a question. Has the company a whistleblower policy?

Mr. Brian Kerr

Yes, we do.

Why did Mr. Kerr need to be prompted to answer?

Mr. Brian Kerr

Why did you ask me the question? I was trying to think about what would be the follow-up question. I am not a comedian. I am not in this for laughs. I was genuinely trying to work out that if we have one, what we have done with it.

Will Mr. Kerr tell me what it is?

Mr. Brian Kerr

I cannot tell the Deputy what it is.

Could someone tell me what it is?

Mr. Keith Poole

Can we produce that policy? We can provide that before the end of the day.

Maybe someone on the board would know what the policy is.

Mr. Brian Kerr

We will get that for the Deputy.

Can anyone help me?

Mr. Declan Doyle

I am sure it is a pretty standard whistleblower policy, that if one is concerned about something, there is a number to ring to have the issue dealt with in confidence.

That could be similar to the number relating to the Garda.

Mr. Declan Doyle

That is what happens. Generally speaking, in the context of companies that have confidential hotlines, there is a number that receives all these complaints. If issues arise, they are brought to the attention of, say, the chief executive or the chairman - depending on what level it happens at in the organisation - and ultimately to that of the board if it is not dealt with by either of the responsible authorities.

I am aware of how they do not work as well. I am also aware of the fact that nobody on the board has a clue with regard to what sort of whistleblower policy operates within the organisation.

Mr. Declan Doyle

We said that we have one.

Yes, and Mr. Doyle does not know what it is. Have any complaints been lodged under the whistleblower policy?

Mr. Declan Doyle

None brought to the board.

Mr. Declan Doyle

To my knowledge, none. In my time on the board, never.

Has Mr. Doyle ever inquired whether there were any complaints into which the board should be looking?

Mr. Declan Doyle

No.

Has a member of staff ever made a complaint to the board about one of its members?

Mr. Declan Doyle

I have just been reminded that there is a complaints policy. There would be quite a lot of complaints made under that but they would not be brought to the level of the board unless they related to major grievances. None has been brought to the level of the board. They would be dealt with by HR and by someone at the appropriate level within the organisation.

Have any complaints ever been made to Mr. Kerr by members of staff in respect of senior members of the board?

Mr. Brian Kerr

No, I do not think so.

Was anything ever brought to his attention in respect of Frank Flannery? Were any complaints ever made about him?

Mr. Brian Kerr

Not to my knowledge, no.

Mr. Brian Kerr

No.

Were any complaints relating to Angela Kerins ever made to Mr. Kerr?

Mr. Brian Kerr

Yes.

Can Mr. Kerr provide some details?

Mr. Brian Kerr

No, I cannot really because that is confidential and it is being handled at the moment.

Mr. Brian Kerr

It is being handled at the moment.

Is Mr. Kerr in a position to outline the nature of what is involved?

Mr. Brian Kerr

There is a complaint, which is confidential and which was received. It is being handled by our experts at the moment.

Who are Rehab's experts?

Mr. Brian Kerr

Our lawyers.

Can Mr. Kerr outline the nature of the complaint?

Mr. Brian Kerr

I do not think I would be allowed to do that.

Mr. Brian Kerr

Because we have been advised not to disclose such information. I am not trying to hide anything.

Mr. Kerr certainly is trying to do so. That is exactly what he is doing.

Mr. Brian Kerr

I am only working on legal advice.

What have Rehab's lawyers told Mr. Kerr about the complaint?

Mr. Brian Kerr

It is in train at the moment and it might prejudice anything if it was taken any further at this moment.

Are the other members of the board aware of this?

Mr. Brian Kerr

They are.

Can Mr. Kerr indicate the nature of the complaint? There is no need for him to identify anyone involved. Does the complaint relate to corporate governance?

Mr. Brian Kerr

No.

Does it relate to pay?

Mr. Brian Kerr

No. I am not going any further. I have said enough and that is the end of - as far as I am concerned - that particular one, with due respect to the Deputy.

It would be helpful if the information could be provided, particularly if it could shed any light on the matters which are the subject of the inquiries we are making today. Mr. Kerr is covered by privilege; he knows that.

Mr. Brian Kerr

I am aware of that.

So he could give us some assistance by outlining the nature of these complaints, particularly if they are relevant to the inquiries we are making with him.

Mr. Brian Kerr

I note what the Deputy says but I cannot go any further.

When was this complaint made?

Mr. Brian Kerr

Two months ago.

What did Mr. Kerr do with it?

Mr. Brian Kerr

I brought in the company lawyer.

Did Mr. Kerr inform the board about it?

Mr. Brian Kerr

Yes.

Did the company lawyer specifically tell Mr. Kerr not to reveal information about it to the Committee of Public Accounts?

I apologise for intervening but could people please switch off their mobile telephones?

The company lawyer specifically directed Mr. Kerr not to elaborate on it?

Mr. Brian Kerr

Yes.

Was the complaint made by a junior or a senior member of staff?

Mr. Brian Kerr

I have said what I have said and I am not going any further. Thank you.

Will it be dealt with under Rehab's whistleblower policy? Will it be dealt with through its whistleblower channels?

Mr. Brian Kerr

I have said what I have said.

I do not believe Deputy Ross is going to get any further with this line of questioning.

The Deputy tried hard.

With respect, it is a completely inadequate response. We were promised transparency and it was stated that Rehab would deal candidly with any matters raised.

Mr. Declan Doyle

The Deputies must respect that this a very sensitive matter that it is being dealt with appropriately. I am not sure it is entirely relevant to the deliberations of the committee and I think it is quite unfair to pursue the chairman in the way Deputy Ross has done. I think we should just leave that for the moment. Rest assured, if anything emerges from the complaint that is relevant to the committee we will keep it informed.

I do not accept that for one moment.

Mr. Declan Doyle

I know the Deputy does not accept it.

This is a very important matter and I am of the view that we could at least be informed as to the nature of the complaint that was made. We are seeking to have Ms Kerins appear before us. She is not here today. We hoped we would obtain some information on relevant facts from Mr. Kerr but he is deliberately withholding it. I am not asking him to make allegations which are untrue; I am requesting that he outline the nature of the complaint and indicate whether the facts relating to it are important to the organisation of Rehab and whether they would affect the view of the committee and the report it is going to compile.

Mr. Brian Kerr

I cannot see that they would. That said, however, I really cannot go any further. I have come as far as I can on that.

Mr. Brian Kerr

I really would like to be more helpful but I cannot.

Could Mr. Kerr advise us if we went into private session?

Mr. Brian Kerr

I probably could, yes.

So Mr. Kerr could assist us if we went into private session?

Mr. Brian Kerr

Yes.

Can we go into private session?

At the Deputy's request, we will-----

Mr. Declan Doyle

With the greatest respect, there are two parties involved in this, namely, the company and the individual to whom the Deputy and the chairman have referred. We need to take advice on the matter and we will then revert to the committee.

Mr. Kerr stated that he would assist us in private session. Perhaps Mr. Doyle might allow him to speak for himself on occasion.

Mr. Declan Doyle

He has already spoken.

I asked about the possibility of going into private session in order to facilitate Deputy Ross and Mr. Kerr. I fully understand why the Deputy or other members of the committee might want the information he is seeking. In fairness, however, the witnesses should at least be given the opportunity to consult their legal adviser.

Might we suspend proceedings while they do so?

We can continue with our deliberations while someone from Rehab goes out and consults the legal adviser.

And we can return to the matter later?

It would be of assistance to the committee if, in private session and in a general way, Mr. Kerr might address the question posed by Deputy Ross. I ask our guests to check the position. We will continue with our deliberations while they are doing so.

Mr. Brian Kerr

Are we covered by privilege in private session?

And there will be no transcript.

(Interruptions).

Private session is not recorded, in written or any other form. A question has arisen and I am asking that it be addressed in a fair way. I am of the view that private session would offer such a way. Perhaps someone on the Rehab side will check the position and we will proceed with our deliberations in the meantime. I ask those who have mobile phones in their possession to check whether they are switched off. Something is interfering with the sound feed.

I will just conclude my questions.

Before the Deputy does so, will people please check their mobile phones? I ask that they be removed from the desks in order that the interference with the sound might cease.

Was it ever brought to Mr. Kerr's notice that the premises in Sandymount might be sold?

Mr. Brian Kerr

We discussed the possibility on one occasion of which I am aware. We were looking at a removal to a complex in Clonskeagh. In fact, we decided that this was not on.

I wish to advise Deputy Ross that the matter to which he is referring came to our attention via correspondence we received. We referred it to the Garda.

I just want to discover what the board knew about it.

That is fine.

How far did the sale process get?

Mr. Brian Kerr

Not very far. Roslyn Park was given to us, for a small amount of rent, by the sisters who had occupied the place beforehand.

We felt it would not be right to move at all. We thought the premises were adequate for what we were doing.

Did someone approach Rehab?

Mr. Declan Doyle

I was around at the time. The premises at Roslyn Park are quite small. There are portacabins there. We have looked at it from time to time and asked "Will we move or not?". At that time, we went out and looked at an office at the business park at Beaver Row, Clonskeagh, with which the Deputy is probably familiar. We did not like it and nothing ever happened. It was the end of the process as far as I - a member of the board - was concerned.

Mr. Keith Poole

To confirm, there was a possibility of moving our head office to Clonskeagh and that was looked at by a sub-committee of the board. It was deemed that the proposal would not proceed. The only discussion of a sale of Roslyn Park was in the context of a possible move. We never discussed selling Roslyn Park with anyone.

Rehab never discussed it as a board or at executive level. Is that correct?

Mr. Keith Poole

Yes.

When was that?

Mr. Keith Poole

It was in 2004 or thereabouts. I can get the detail for the Deputy.

Rehab was not approached by anyone.

Mr. Keith Poole

Absolutely not.

It never came to the notice of the board at all.

Mr. Declan Doyle

Never as a material issue, other than at that time.

That was it. It was an internal initiative. It was considered that Rehab might move and it never came to the notice of the board that there might be a developer looking at it.

Mr. Declan Doyle

That was never brought to the attention of the board, never discussed at the board and never raised at the board.

That is fine.

Who was on the sub-committee?

Mr. Keith Poole

From recollection, it was Mr. Enda Marren, who is deceased, the chairman of the day and one other board member. I can get the exact detail.

If you would, please.

I thank Mr. Kerr and his team for being here today. I thank them for their frankness. We have seen witnesses in this committee room before who do not provide us with information when they possibly have it. At this stage, we can tell the difference. We are missing information because the key witnesses we wanted to see along with those in attendance are not here. The witnesses in attendance have been frank to date in their exchanges with the committee.

It has been said before, but I record the fact that there is a great deal of good work being done in Rehab on the front line. I met a lady the other day who works to provide front-line services in one of Rehab's organisations. She told me she is ashamed and embarrassed to go to work these days. She has no reason to be nor do the many people in Rehab who are providing very important services to people with disabilities. However, there is a serious cloud hanging over the organisation at corporate level, including perhaps at board level.

My first question is a practical one. Who is in charge of Rehab today? Is there an interim chief executive or deputy chief executive who is acting in that capacity?

Mr. Brian Kerr

The board is in charge of Rehab today. The GMT is running the day-to-day activity, reporting to the board.

Who is the acting chief executive?

Mr. Brian Kerr

There is no acting chief executive as we speak. We will be seeking that when Dr. Molloy helps us to see where we are going and what path we will take.

There is no intention to fill the CEO position until Dr. Molloy's review of the organisation is complete.

Mr. Declan Doyle

To ensure continuity of service and avoid a breakdown of communication at executive level, the GMT meets regularly and has appointed a chairman from among its number to ensure that all issues that need to be addressed in terms of service delivery for the people who rely on us for their support are dealt with.

Mr. Hugh Governey

In case there is any impression that Dr. Molloy's project will be a very long one, I note that while it will be reasonably long, it will be addressed with an appropriate degree of urgency. It will be a living project. Members have probably seen Dr. Eddie Molloy in operation before. He is very proactive and interactive with people and he is up front in asking the right questions. He is not afraid to give his opinion. Not having a chief executive at the moment is a serious matter and one I expect Dr. Molloy to consider at an earlier stage of his project. It is not as if we will wait six months or nine months for him to produce a report. He does not necessarily produce a report as other consultants do. It is a process of review and change.

I want to get an insight from Mr. Kerr into what it is like to be a board member of the Rehab Group. I share some of the views of Deputy Ross, which is no slight on Mr. Kerr or his colleagues on the board. However, I get the distinct impression that there might have been a hands-off approach by the board. From listening for the last number of hours, it appears, and I accept Mr. Kerr's word, that many important things happened in the organisation that the board was unaware of. Mr. Kerr might give me an insight in terms of his role as chairman of the board. What does that role involve? How many hours a week and how many meetings are involved?

Mr. Brian Kerr

This last week, certainly, we have been there day and night.

Mr. Kerr might refer to a more typical week.

Mr. Brian Kerr

We meet on a regular monthly basis and we have pre-board meetings at which the agenda is discussed as is the way it should be dealt with. That involves the vice-chairman of the organisation, the chief executive and me. If there is another board matter that is arising, the relevant person will be included also. We also meet on subsidiary boards from time to time. Hardly a week goes by when we are not be involved in one way or another. It may not seem like it, but we are a hands on board, or try to be.

I return to the issue of Mr. Flannery and his lobbying activities as an example. Mr. Kerr was the chairman of the board for some of the period during which Mr. Flannery was a member. Mr. Flannery was sitting on the board, having been a CEO, and was receiving an income from the Rehab Group. Mr. Kerr was aware of that as were his colleagues on the board.

Mr. Brian Kerr

Yes.

Did Mr. Kerr at any time feel there was a conflict of interest where a board member earned an income by virtue of his links with Rehab?

Mr. Brian Kerr

There were those of us who felt that.

Were those concerns ever articulated?

Mr. Brian Kerr

They were.

Was that to Mr. Flannery?

Mr. Brian Kerr

No.

Was it to the chief executive?

Mr. Brian Kerr

Yes.

This is the sort of insight I am looking for. Mr. Kerr was sitting on the board. Deputy O'Donnell read out the memorandum and articles of association earlier and Mr. Doyle read a slightly different clause but we know that members of the board should not have been deriving an income from their links with Rehab. We know as a matter of fact that Mr. Flannery derived an income of almost €500,000 while he was on the board. Mr. Kerr had some concerns about that as chairman.

Mr. Brian Kerr

I felt it was questionable. However, I believed he was doing a good job and it was necessary at the time, particularly around the charitable lottery fund.

Did Mr. Kerr raise his concerns with the chief executive of the day?

Mr. Brian Kerr

I mentioned it.

Were his concerns taken on board, listened to or dismissed?

Mr. Brian Kerr

They were noted. Eventually, Mr. Flannery retired and it did not arise then.

Was Mr. Kerr aware that the payments were being made to a company that had been struck off and no longer existed?

Mr. Brian Kerr

I was not aware at that time.

Did you become aware of it?

Mr. Brian Kerr

Only when I was advised of it. I knew at that point.

Did Mr. Kerr raise any concerns about that?

Did it ever come up at a board meeting? Did someone say, "God we are paying Frank into a company that doesn't exist. He's already on the board. He shouldn't be getting an income. Is this appropriate?" Was such a discussion ever had at a board meeting?

Mr. Brian Kerr

Not as such but the actual company was struck off in 2012 when that was unearthed.

And that was never raised at a board meeting?

Mr. Brian Kerr

Not to my knowledge.

Mr. Kerr knew Mr. Flannery was lobbying in respect of the charitable lotteries scheme.

Mr. Brian Kerr

Yes, I did.

Did Mr. Kerr know what else he was lobbying about?

Mr. Brian Kerr

I knew the European platform for the disabled.

Were there ever reports back to the board meeting of Mr. Flannery's lobbying activities or advocacy?

Mr. Brian Kerr

No.

So Mr. Kerr knew Mr. Flannery was being paid, he knew approximately the areas in which he was lobbying but he did not know the results. That was dealt with between the chief executive-----

Mr. Brian Kerr

The lobbying was on an ongoing basis and we all know what we hope the result will be. We wait to see.

Anyway, he was not a very effective lobbyist in that regard.

Mr. Brian Kerr

I did not say that.

No, I did. Did the board ever instruct or direct Mr. Flannery in respect of any lobbying?

Mr. Brian Kerr

No.

That relationship was between Ms Kerins and Mr. Flannery. Was that the reporting structure?

Mr. Brian Kerr

Yes.

On the coffins issue, I refer Mr. Hogan back to the extract of the minutes of the audit committee, which he kindly provided to the committee, dated 8 February 2010, which are astonishing. The minutes state: "Mr. Hogan asked the audit committee if the disclosure of interests would be a problem if it got into the public domain."

Mr. Liam Hogan

Yes, I asked that question.

It is a fair question but I wonder if an activity an organisation is involved in could be damaging should information about it get into the public domain, if that is not a concern to begin with. There were doubts in Mr. Hogan's mind.

Mr. Liam Hogan

No, this was an exploratory question. These are the minutes of 2010. With the benefit of hindsight, of course this was a serious decision but that was what I was aware of in February 2010 and that is what the board discussed. It had the internal auditor in there and it says there in 7.10: "The committee unanimously agreed...".

Mr. Liam Hogan

It has to be taken in the context of 2010.

I accept that point but-----

Mr. Liam Hogan

If I knew then what I know now, obviously------

What does Mr. Hogan know now that he did not know then about whether it was a good idea for the Rehab Group to enter into business with a company that had links to the chief executive officer's family and a member of the board of directors?

Mr. Liam Hogan

All that came out later.

No, that is not correct because the minutes clearly state: "Ms Kerins advised the board that certain members of her family, namely her brothers [which Deputy McDonald has established is a typo] and husband held shares in a company that Rehab Enterprises had been dealing with." When the audit committee was taking this decision with Mr. Hogan as chairman on 8 February 2010, they knew Ms Kerins's family had links to this company to which the Rehab Group was talking.

Mr. Liam Hogan

I knew that much but I did not know-----

That did not come out later. Mr. Hogan knew that.

Mr. Liam Hogan

I did not know the underlying details of the issue at that point in time.

I do not understand. Will Mr. Hogan explain that?

Mr. Liam Hogan

That was the situation in February 2010. We discussed it and based on the information we had at that point in time, we felt we had dealt with it. That was my professional opinion at that point in time.

Has Mr. Hogan's professional opinion changed?

Mr. Liam Hogan

With the benefit of hindsight.

Does he feel now-----

Mr. Liam Hogan

It is irrelevant what I feel now.

Mr. Hogan is present to account for his actions as the chairman of an audit committee about a commercial decision he chose to enter into on behalf of an organisation that receives almost €100 million in taxpayers' funds and, therefore, I would be grateful if he could tolerate the question.

Mr. Liam Hogan

I am doing the best-----

Can I ask the question? Does he feel it was appropriate for the Rehab Group to enter into a business arrangement with a company in which relatives of the chief executive officer were involved?

Mr. Liam Hogan

It was not appropriate but I did not realise how serious it was in 2010.

Who is Mr. Connaughton?

Mr. Liam Hogan

He is the internal auditor.

He also made an interesting comment in the minutes: "Mr. Connaughton advised that if the group became a big player [I presume that means if it buys a certain number of coffins] then the competition might start looking at us a bit closer." What did that mean?

Mr. Liam Hogan

That was his professional opinion.

I will summarise my reading of this. Mr. Hogan, as chairman of the audit committee, was taking his duties seriously and it is clear from the minutes that he had reservations about the Rehab Group entering into this agreement in the first place.

Mr. Liam Hogan

Yes, I did.

Anyone who reads the minutes can see Mr. Hogan clearly had reservations about this venture because of the familial connections with the chief executive officer.

Mr. Liam Hogan

Yes.

The internal auditor, Mr. Connaughton, seems to also have had concerns but he basically said if the Rehab Group did not do this on a large scale, "they would not look at us too closely". Is that a fair summation?

Mr. Liam Hogan

Yes.

I thank Mr. Hogan. Mr. Poole mentioned the issue of reputational damage, the CRC and the care trust. Will he explain the link between CRC, the Rehab Group and the care trust?

Mr. Keith Poole

We are both effectively partners in the care trust together.

What does the care trust do? How does it operate?

Mr. Keith Poole

It runs lotteries to raise funds for both charities.

How are the profits divided?

Mr. Keith Poole

An amount goes to the Mater hospital and it divides equally after that.

What does the Rehab Group do with the money it receives?

Mr. Keith Poole

I covered that earlier in a question. It goes directly into the Rehab Group.

Has funding from the care trust ever been used for the purpose of loans to individuals, organisations or subsidiaries of the Rehab Group?

Mr. Keith Poole

No, I would not say so. The Rehab Group makes loans to finance certain things. For instance, it absolutely finances Rehab Enterprises, which is our social enterprise. Some of them over the years have lost money and some have made money but we have financed them.

In Mr. Poole's professional opinion, have any loans deriving from funding through the lotteries scheme ever been written off? The Rehab Group has never used------

Mr. Keith Poole

Sorry, I think I know what the Deputy is asking me. Yes, there are loans. There is a scheme set up. There are loans forgiven back to the care trust. I did not understand the question.

Will Mr. Poole explain that?

Mr. Keith Poole

The lottery company remits proceeds to both charities and then over time the lottery company itself loses money. That is financed by way of a loan that is then forgiven. I do not know if I am making myself clear.

Mr. Poole probably is. I am just trying to comprehend it all. So all the funding the Rehab Group receives from the care trust goes into the general fund.

Mr. Keith Poole

It is accounted for in our accounts. The Deputy has a copy of them. We treat it as an associate company in the profit and loss account.

Has Mr. Poole in his role or anybody else from the Rehab Group had any contact with the interim administrator for the CRC regarding his findings and work?

Mr. Keith Poole

I can talk about that. I am a member of the board of the care trust and we have been slightly in abeyance whilst the administrator does his work but the CRC has effectively appointed two new directors to our board and effectively we are back in operation again.

During the investigation by the administrator of the CRC, was there contact with the Rehab Group as distinct from the care trust? Were questions raised with the Rehab Group or were there discussions with the Rehab Group?

Mr. Keith Poole

No, not to my knowledge.

Mr. Liam Hogan

May I make an intervention?

Mr. Liam Hogan

I am chairman of the care trust at the moment.

I did not realise.

Mr. Liam Hogan

The Deputy might address his questions to me.

Has Mr. Hogan been contacted by the interim administrator of the CRC regarding the operation of the lotteries scheme within the Rehab Group?

Mr. Liam Hogan

We have had one board meeting since the CRC broke up. We still have the four members from the Rehab Group. We have two new members from the CRC. They are under administration and they have to provide two more members.

We had a board meeting because the annual lottery came up for renewal. It is a commercial lottery operating under the Gaming and Lotteries Act 1956. We had to have a meeting to prepare the chief executive to go before the judge and have the lottery agreed, and it was agreed. The judge made the comment that the documentation was excellent. It is agreed for another year. It is a year-by-year lottery. If we do not get that agreed, we are out of business. It is that draconian in terms of business under that sort of pressure.

One of the articles in the agreement on the lottery stipulates maximum administration expenses cannot be more than 40%. Therefore, 60% goes to the beneficiaries.

Yes. Does the 60% go into the general pool?

Mr. Keith Poole

It goes into the Rehab Group. I will not call it a general pool.

So it goes into the Rehab Group.

Mr. Liam Hogan

The Rehab Group gets part of it and the Central Remedial Clinic gets part of it. The Mater Hospital gets a small amount. What the Central Remedial Clinic does with that is of no concern. What the Rehab Group does is of concern because I am in both organisations.

Is Mr. Poole satisfied that the 60% that goes into the Rehab Group has never been leveraged for loans to individuals or organisations, apart from backing to the-----

Mr. Keith Poole

Absolutely, yes.

This is my final question. We heard a very wholesome and humbling opening address in which Mr. Kerr categorised a number of the failings of the board. He stated the stark fact that the reputation of Rehab has been damaged and that the response of the board was inadequate. He said Rehab had not exercised strict and appropriate oversight and that it had lost the confidence and trust of the people who use its services. He stated changes to the board are needed. He referred to miscommunication and stated the organisation had been remiss in renewing the board membership. He discussed with my colleague the issue of the coffins and, perhaps, the board not having had a hands-on approach or knowing what was going on in that regard. There is the matter of a director receiving fees for lobbying.

Mr. Kerr used the word “unfortunately” in respect of the length of time he had served on the board of Rehab. Does he concur with me that there is clearly a need for a new board in Rehab to lead the change?

Mr. Brian Kerr

We do recognise, as I have said, that we have been inadequate in the control of the situation. Part of the reason we are having Dr. Molloy look at the situation is to refresh the situation, including the board. We shall rectify that as quickly as possible whenever we can. It would be foolish to think that we will do it overnight because continuity is required somewhere along the line. However, I am sure many of my colleagues would be only too glad to stand down.

I thank Mr. Kerr.

Mr. Keith Poole

This was discussed at the board meeting last week. One of the board members asked whether they should all resign. Mr. Molloy was present and he was talking about a transition phase. That is just a little bit of context.

That is helpful. I thank Mr. Poole.

Mr. Hugh Governey

In the context of the very valid points Deputy Harris has made, it seems to be quite a long time since we made our opening statements. What we had decided in advance of coming here today was that we would come in pretty much with our hands up, as distinct from other occasions, perhaps. We are coming in, putting up our hands and saying we have made mistakes and there are things that happened that should not have happened. It is a time for radical and urgent change. It is a real wake-up call for all of us on the board and, I hope, future members of the board of the Rehab Group.

Rather than having it come across that we continue to draw out and build on the errors we have made, I hope it has come across that we are cognisant of the mistakes and errors that have been made. We are committed to addressing them with Dr. Molloy, who would not take on the project until he met the board. He actually insisted on looking around the boardroom table to ensure he had buy-in from every member of the board as to what his strategy would be. I reassure the committee in this regard. I hope the Chairman does not mind my saying that, because we all have personal reputations in addition to our commitment to the Rehab Group, I am absolutely satisfied and determined that the issues that need to be addressed will be addressed to the very best of our ability. Clearly, from the point of view of the committee, and from ours, it is extremely upsetting and frustrating that our two former chief executives are unable to be here today, for different reasons. Unfortunately, it will be a matter for the committee to see how that void can be filled. I just felt I should say that.

I must return to Deputy Ross. I ask Mr. Doyle to give the information that he was asked for.

Mr. Declan Doyle

I have consulted our lawyers who are handling the matter that was referred to. The strong legal advice is that it would be quite inappropriate and improper for us to make any disclosures, either in public or private, at this stage. The matter is being dealt with and it is going to due process. That is it.

That is fine; I do not want any disclosures. Actually, I do but they will not be given to us. Could Mr. Doyle just tell us what the process will be?

Mr. Declan Doyle

The process will be a process whereby we take legal advice. Clearly, we will then engage in consultation to see whether the matter can be resolved with the individuals concerned, in the normal way one deals with these matters. I hope it will be resolved satisfactorily, but I have no more to say on that. That is the situation. My lawyer has advised me strongly-----

What sort of procedure is it? Is this the set procedure-----

Mr. Declan Doyle

Deputy, we dealt with-----

I wish to know about the procedures Mr. Doyle has for this sort of complaint. I am not even asking about the specifics. What procedures are there for this?

Mr. Declan Doyle

This matter will be dealt with on the advice of our lawyers with the board or people nominated by the board. They will take charge of it in a careful way. They will respect the rights of all the individuals concerned — both individuals.

Specifically, what procedures will Mr. Doyle go through? It is no good just saying the matter will be dealt with by the board in the way that is appropriate.

Mr. Declan Doyle

It will be dealt with-----

Let me just finish. This is obviously a formal situation. What way will Mr. Doyle deal with it? I do not want him to give me any of the details yet, just how it will be coped with.

Mr. Declan Doyle

It will be dealt with in accordance with our disputes procedure in the company. We have a grievance procedure. It will be dealt with through that.

Will it be disciplinary or will it be-----

Mr. Declan Doyle

It is not a disciplinary procedure.

Will Rehab report to us when it is finished?

Mr. Declan Doyle

I will take legal advice on it at that stage and disclose what I am permitted to disclose.

I do not believe that is satisfactory but that is back as far as I will take it today. I intend to pursue it further in the future.

Notwithstanding the restrictions we appear to have in regard to discussing that particular point, is Mr. Doyle confident that Ms Kerins will make herself available to the organisation to deal with the substance of the complaint? Clearly, the complaint was made directly against her. Alternatively, is it the case that Mr. Doyle expects-----

Mr. Declan Doyle

I do not know how Deputy Nash reached that conclusion.

Hold on a second: I stand corrected if that was not the inference made earlier. Was the inference not that there was an individual in the organisation against whom a complaint was made? Is that correct?

Mr. Declan Doyle

Nothing has been mentioned about this.

That is my recollection.

Would Mr. Doyle explain?

That is my recollection.

Mr. Declan Doyle

As far as I know, no name was mentioned on this side either in terms of who made the complaint or the person against whom the complaint was made. Perhaps I am mishearing.

I might ask for the advice of the Chair.

Perhaps Mr. Kerr would be able to tell us. I think he confirmed it was against the chief executive.

Mr. Brian Kerr

I cannot recall that I did.

That was the clear indication. It was clearly understood by most members here that it was Ms Kerins. Is that correct?

Has the individual made themselves available to the organisation to have the complaints against them addressed?

Mr. Declan Doyle

I am sure they have.

Is Mr. Doyle confident that the individual will continue to make themselves available given that they may be out the gate, so to speak?

(Interruptions).

Mr. Declan Doyle

-----on behalf of the individual. Anybody else on this side of the table can.

I am happy to move on to some other points.

The Deputy does not have to move on.

I am left with no other option. Four company directors and one executive from the organisation are before us. At the last meeting with Rehab, I pursued a line of questioning in respect of the remuneration of directors. Clearly, the witnesses have spoken very openly about their own concerns about the nature of the arrangement with Mr. Flannery when he was a member of the board. I checked the transcript of the last meeting. Ms Kerins said that "from time to time - Frank Flannery is not the only person - we engage with companies in which directors have [an] interest". Do any of the witnesses have any formal financial relationship with Rehab or have they in the past had any formal relationship with Rehab for which they were remunerated? Have they provided any services to the organisation?

Mr. Brian Kerr

I can answer on my own behalf. The answer is absolutely not.

What about Mr. Kerr's colleagues?

Mr. Declan Doyle

It is the same.

Mr. Liam Hogan

I had remuneration back in 2003 and 2004.

Could Mr. Hogan repeat that?

Mr. Liam Hogan

I had remuneration back in 2003 and 2004.

What was the nature of the arrangement?

Mr. Liam Hogan

I was chairman of a committee called the Rehab council which was focused on the needs of people with disabilities. I received permission from Deloitte, which was my employer at that time, to spend one day a month on it. I visited centres all over Ireland to set up committees focused on the needs of people with disabilities. After that, in 2006, a new rule came in that no remuneration would be paid so my remuneration then stopped. That is a matter of record.

That new rule was repeatedly broken by Mr. Flannery. The memorandum and articles of association were changed at some period.

Mr. Declan Doyle

I think they were.

Mr. Keith Poole

The memorandum and articles of association have not changed in that regard. A different structure was in place and I think Mr. Hogan was referring to that. Fees were paid to subsidiary directors at that time. That has not happened since 2006.

Are there any other current directors of the board who have a formal financial relationship with the organisation through contracts for services and so on during their tenure and term of office? Are the witnesses aware of anybody affected by this, excluding Mr. Flannery, who has obviously stepped down from the board?

Mr. Hugh Governey

As I am one of the four, I can confirm that I have not received any remuneration of any kind since I was appointed a director. My career was in the insurance business with an insurance brokerage. Many years before I joined the board, we entered into a competitive tender for the insurance service and our firm won that business. To the best of my knowledge, when I joined the board of Rehab Group, I had already retired from that company. I might have had some small run-off of balance of shareholding to dispose of, but that was it.

The practice referred to previously that has been uncovered by the revelation that Mr. Flannery was in receipt of a significant payment over a period of six or seven years for providing services to the organisation has now been discontinued. How soon is now? When was that practice discontinued? Can the witnesses give me a date?

Mr. Keith Poole

It was from the beginning of this year.

Was that subsequent to the media furore and the revelations in the media about Mr. Flannery's relationship with the organisation? Was it the case that the organisation was caught and then decided to put its hands up, so to speak, and say that it was going to stop this?

Mr. Declan Doyle

I will answer that question. Mr. Flannery's remuneration was fully disclosed in the annual report each year up to that time.

It did not become a matter of public attention until recently.

Mr. Declan Doyle

As we have said, we put our hands up about certain shortcomings in our oversight. When this became a matter of public concern, as it clearly did even though it had been in the annual report, we looked at it in detail and addressed it for Mr. Flannery and anybody else who might have fallen into that category.

Is that one of the areas Dr. Molloy will be looking at in the context of his review of the organisation? We seem to have received three different responses from the corporate body in respect of how it deals with payments to directors under article 33 of its memorandum and articles of association. Some of them are quite contradictory. There has been quite a lot of public attention in respect of this and I think the witnesses would accept and understand the public view on that. The question of whether it is right or wrong is immaterial. There are many people dancing on the head of a pin about how that particular provision is interpreted, but how it looks to the public and how it might look ethically and professionally is another day's work entirely. It is very important that Dr. Molloy deals with that, as is the possibility that the organisation would take some responsibility for expressly ruling that out.

Mr. Declan Doyle

The Deputy can take it that from that time onwards, no director of this group will ever receive payments while he or she is a director of the group or a subsidiary company. It is absolutely black and white.

Could Mr. Doyle tell me about the timeframe for the Molloy report? I think he appreciates the urgency of it, the pressure the organisation and, indeed, the charity sector are under, and the responsibility he has. What does he expect from that?

Mr. Declan Doyle

I do not know if members know Dr. Molloy but he is an extremely impressive individual and an eye opener for me. He explained to us that he does not come in for two or three months and then produce a big report that we must try to implement. As we all know with reports that some of them are not implemented. Dr. Molloy sets out rolling reform so he comes in, identifies an issue, fixes it, goes on to the next issue, fixes it, goes on to the next issue and fixes it. He will then work with the GMT, staff below that and all of us to get it done as soon as possible. I cannot put a specific timeframe on it.

I appreciate that and have done some work in that area. What does Dr. Molloy see as the priority?

Mr. Declan Doyle

The priority is to put adequate structures in place. It involves looking at the governance structure of the board and how the board relates to the GMT and all the stakeholders in the broader sense - members of the committee, the financial providers, the HSE, SOLAS and everybody with whom we deal - in order that we can put a better structure in place that also reflects the new charities legislation that is coming in. We will be governed by that, and everything we do and everything Dr. Molloy introduces should be compatible with that new structure.

I have a question for Mr. Poole, who might be best placed to answer it. I note the Revenue Commissioners have procedures in place to ensure charities like Rehab which enjoy tax exemption status are subject to reviews from time to time to ensure all the terms of the exemption they enjoy are adequately fulfilled. Have the Revenue Commissioners taken an interest in recent years? Have they done any such reviews and what did they find?

Mr. Keith Poole

Two of our subsidiaries have had Revenue audits within the past two years. No money has been remitted in those. We make a return to the charities section of Revenue every year with our accounts. In common with other organisations, we have recently had an interview with Revenue relating to section 39 agencies. We have not had any difficulty with Revenue but we have always returned what we are required to return to the charities section of the Revenue Commissioners. I do not know if that answers the Deputy's question.

That is fine. I will leave it at that for the moment.

I call Deputy Fleming.

Mr. Liam Hogan

Can I clarify my situation, my declaration of getting remuneration? Can the company secretary confirm that?

Mr. Keith Poole

What was that? Sorry?

Mr. Liam Hogan

The remuneration I got before they made it illegal to get remuneration.

Mr. Keith Poole

I will be able to when I go back and check it. It is a long time ago but I will check it.

Mr. Liam Hogan

It is a matter of-----

Mr. Keith Poole

Record, yes.

Mr. Liam Hogan

-----record.

Mr. Keith Poole

The figures sound correct to me but I will just double-check.

Mr. Liam Hogan

Would Mr. Poole confirm it?

For the figures.

Mr. Liam Hogan

It is absolutely dynamite in the present context but in the previous context it was perfectly legal.

Mr. Declan Doyle

Quite normal, good practice, yes.

Mr. Liam Hogan

Absolutely, because I put in an enormous amount of work.

Is Mr. Hogan also in a position to let us know what he received from the organisation?

Mr. Liam Hogan

Yes, I am. It was €10,000 a year. Does the Deputy want to know anything else?

For how long did he receive €10,000 per year?

Mr. Liam Hogan

For five or six years, because I was chairman of that particular committee that focused on the needs of disabilities.

Did that start in 2003 and end in 2008?

Mr. Liam Hogan

Probably 2000 to 2006, or something like that.

Was it a total of €50,000 in five years - €10,000 per annum?

Mr. Liam Hogan

Yes. It was perfectly legal and I did the work. I got the days off. I travelled all over the country. The slogan was: "Nothing about us without us." The guy I was working with had a doctorate in rehabilitation studies. Frank Flannery was the chairman and he allowed all of this quite expensive activity, driving around the country.

In fact, he was CEO, not chairperson, at the time, was he not? He was chief executive officer.

Mr. Liam Hogan

He was CEO at that time, yes.

Were Mr. Hogan's fellow directors aware-----

Mr. Liam Hogan

Absolutely.

-----that he was receiving a remuneration for this work.

Mr. Liam Hogan

There were three of us. Two of them are deceased and I am the only remaining one. It was back in the days when it was perfectly legal.

Mr. Declan Doyle

Could I just go back to one point about the whistleblower? We were asked how many complaints there had been under the whistleblowing policy. There have been two, both in the UK. One was investigated and the allegations were not upheld. The other one is ongoing. It involves abuse of petty cash. They were minor issues, just on a point of clarity.

I call Deputy Fleming.

I welcome the gentlemen. It is a long day and a new experience for them, and it is difficult from that point of view. Deputy Nash mentioned the issue of payments to Laragh Consulting and Mr. Frank Flannery. I am grateful for the chart of the payments to Mr. Flannery and Laragh Consulting dating back over the past seven years that the witnesses gave us at the beginning of the meeting. In 2013, it was €79,950. So that we are clear, was that to Mr. Flannery or Laragh Consulting? When did it change from one to the other?

Mr. Keith Poole

I think I answered that earlier. It finished in January 2013.

The 2013 payments were to Mr. Flannery.

Mr. Keith Poole

Correct.

The 2012 payments were to Laragh Consulting.

Mr. Keith Poole

Correct.

According to the chart Rehab gave the committee today, the figure for 2012 is €66,000 and for 2011 it is €51,000. I want to ask specifically about that figure. I am looking at the audited accounts Rehab presented to the committee today. On page 39, note 26 states that there were consultancy services to the value of €66,000 for 2012. In 2011, it was €11,000.

We dealt with that earlier on.

Sorry, I missed that point.

Mr. Keith Poole

The disclosures are from the date one is appointed as a director.

I will move on from that. I am happy with that. I just spotted it when coming in. On the Rehab Group, I want to refresh where we are at as the Committee of Public Accounts and where the public is at. Up to now, the general understanding of the position with the Rehab Group, and the figure we quoted at all previous meetings, was that it was in receipt of State income in the order of €83 million, the group's turnover income was in the order of €183 million and therefore approximately 45% of Rehab's income came from State sources. Commentators took a certain view because the State income was less than 50% and Rehab was part of the section 39 agreement. However, if I look at Rehab's accounts today and the figures it has given us, Rehab is telling us now that the grants from the Government per the Rehab accounts - it lists all the different breakdowns of the figures - come to €95,538,000. That is according to the chart Rehab gave us today.

Mr. Keith Poole

Correct.

It will be most significant to the people that the accounts give a geographical breakdown of Rehab's turnover. Of the turnover of approximately €183 million, according to page 16 of Rehab's accounts, €118.363 million is in the Republic of Ireland. Is Mr. Poole happy with that figure?

Mr. Keith Poole

Yes.

Straight away, that tells me that of Rehab's €118 million turnover here in Ireland as per its accounts, €95.5 million comes directly from Departments, which brings Rehab into the position where 81% of its income in Ireland comes directly from the Irish taxpayer. As far as I am concerned, it is a completely different group from that which everybody had understood heretofore.

While Rehab gives those figures on page 16, on the same page it also states that fund-raising and lottery income was another €13.449 million. When I look at the funding Rehab gets directly from the taxpayer of €95.5 million and what it receives from the public through fund-raising of €13.5 million, it comes to €109 million directly from the people of Ireland, most of it through Departments, which is taxpayers' money, and through fund-raising, out of Rehab's turnover in the Republic of Ireland of €118 million. That means 92% of funding of all Rehab's operations in Ireland comes directly from Departments or, in the case of a small portion of it, from the public through fund-raising.

Understandably, in recent weeks, commentators have asked why were we going so hard on Rehab - we had CRC here earlier - and we were saying it gets a significant portion of its income from the taxpayer and we are entitled to follow taxpayers' money. When they now realise that over 80% of all Rehab's income in Ireland comes from the taxpayer and over 92% of it comes from the public through fund-raising and the taxpayer, they will probably think we have been going soft on Rehab, although not these gentlemen. I have great respect for these gentlemen and I am pleased they are here. However, had we started off day one fully appreciating that 90% of all Rehab's income had come from the taxpayer and the public, we would have taken a firmer view with Rehab earlier on. We went a little soft because there was a view that the majority of Rehab's income came from other sources, not from the taxpayer. I want to dispel that view and make clear to the public the reason we are not at all finished is that it is now clear that Rehab is practically, but not officially or in law, a semi-State company. In effect, Rehab is almost a semi-State company. That has not been made clear to anybody up to now.

What disappoints me is that we have umpteen items of correspondence and meetings and how I would see the basic role of Rehab has never been made clear to us up to now. As an organisation that receives practically all its funding as I outlined, we need to be even more intrusive in our work on Rehab than if it were an organisation where less than the majority of its funding came from the State.

Is Rehab satisfied with the figures I quoted?

Mr. Poole wishes to comment.

Mr. Keith Poole

Deputy Fleming's figures are correct. I would just point him back to my opening statement where, I believe, I acknowledged that, but I pointed out that our staff do not have the same security of tenure as, perhaps, colleagues have in the public sector, particularly when it comes to pensions and the fact that, for example, if we lose a service contract or whatever we do, it falls back on Rehab to sort it out, when TUPE would apply. I am not arguing with Deputy Fleming at all, but there is a subtle difference there.

I fully agree. Nobody has mentioned the services Rehab provides or the clients who benefit from them. I accept that Rehab has 3,000 staff. I accept also that they are not public servants in terms of pay and protection. People understood Rehab as a private company, but substantially it is in the public arena. That needs to be made clear.

In simple figures, what was Rehab's retained surplus last year and what is its retained surplus currently? A registered charity is supposed to be a not-for-profit organisation, but I estimate Rehab's reserves at €75 million between revenue and capital reserves. That is a considerable income for an organisation with a registered charity number that claims to be not-for-profit. I ask Mr. Poole to explain that.

Mr. Keith Poole

The Deputy is referring to our balance sheet, which is set out on page 13 of our financial statement. The reserve figure at the bottom of the page includes an item called "capital reserve". Since before I joined Rehab, the organisation has valued its property on a replacement basis rather than a market value basis. That capital reserve arises out of the revaluation of properties.

What does Mr. Poole think the property is worth today?

Mr. Keith Poole

If I may finish my point, revenue reserves have moved from a negative €7.8 million to a positive €17 million. I am a chartered accountant and I am not going to hold up a flag for the Institute of Chartered Accountants but this change is due to what is called the FRS 17 adjustment, which is our pension adjustment. Taking the €17 million figure, we pay €9 million per month in wages. Even under the new statement of recommended practice, charities have to set a policy for reserves. For an organisation of our scale, I do not consider €17 million to be a huge reserve. However, I take the Deputy's point that our accounts suggest we are a very wealthy organisation.

The balance sheet also includes a figure for cash, comprising cash and cash deposits. As we also borrow money, our net cash position, which is set out in the notes in page 38, was €17 million at the end of 2012 and fell to €15 million at the end of 2013. I accept that the accounts might give the impression we are a wealthy organisation, but as the person responsible for our finances, I believe our reserves are appropriate for what we do.

That is fine. One of the reasons Rehab is before this committee is because we are also examining CRC and several other organisations in the charity sector under the section 39 agreements. People want to have confidence in the governance practices of these organisations. Rehab is taking steps to improve its governance.

Rehab is not required to pay corporation tax or profits tax in Ireland because of its charitable status.

Mr. Keith Poole

That is correct.

However, Rehab's auditors charged €72,000 for tax advisory services.

Mr. Keith Poole

That is not correct. I think the Deputy is misreading that line. Rehab Enterprises, which is our social enterprise company, has a branch in Poland.

I will clarify my observation. Rehab paid €74,000 in corporation tax in respect of the Polish branch of Rehab Enterprises Ireland. Is that correct?

Mr. Keith Poole

Yes.

It paid no tax in Ireland.

Mr. Keith Poole

Correct.

Why did it pay its auditors €72,000 for tax advisory services, as set out on page 16, given that it is exempt from corporation tax in Ireland?

Mr. Keith Poole

Our company in the UK, Training and Business Group Limited, is a non-charitable entity. Rehab loses a significant amount of VAT. We have to look at making sure we lose as little VAT as we can. Many of our activities are exempt. The taxes we pay include VAT and, obviously, full PAYE and PRSI contributions. Our organisation includes several entities that are taxable for corporation tax purposes. I do not know the details of the tax consultancy work done by PricewaterhouseCoopers, but it has a legitimate role in giving us advice on tax.

Mr. Poole told the committee that 15 organisations are registered with the charities commission in Scotland and elsewhere in the UK. Do they not have charitable status?

Mr. Keith Poole

They do.

Is Mr. Poole saying this advice was to help the company avoid paying too much VAT?

Mr. Keith Poole

I am not saying that. I said I would have to check the precise nature of the advice. The organisation carries out taxable activities and, as we fall into the tax net, we need to get advice.

Mr. Poole told the committee that Rehab had 15 entities registered in Ireland. Rehab's website outlines its registered charity number, which is CHY4940. How many Rehab companies have individual charity numbers?

Mr. Keith Poole

We handed out a chart. I do not know if the Deputy saw it.

I am looking at the chart.

Mr. Keith Poole

The chart indicates which entities are charities. For example, Newgrove Housing Association and Rehab Care are charities.

How many companies in the group are registered as charities with charity numbers?

Mr. Keith Poole

I will revert to the Deputy with that information.

I am happy for Mr. Poole to forward it to the committee. He is satisfied that he complies with all the issues raised.

Mr. Keith Poole

I have the information on entities, which I also provided in my opening statement. There are 31 entities, 15 of which are registered in Ireland and 15 in the UK. However, I do not have the figure for which are charities.

I do not intend to encroach on the data protection legislation but, in regard to the information we have not been given on people who will be receiving payments from Rehab in coming years, I will be insisting that the HSE seek this information when it is negotiating with the organisation under the section 39 agreement. I will chastise the HSE and other State organisations if they hand over €95 million without at least getting that information. Will all of the information that the HSE and other State bodies might require under the section 39 agreement be supplied to them? I am not saying this would apply to the committee because we are limited by data protection considerations, but it would not be acceptable for the information to be withheld from the HSE, as Rehab's paymaster general.

Mr. Keith Poole

I am not pushing back against anything the Deputy is saying, but we have always provided any information the HSE and other funders requested from us. We will continue to co-operate and I would not like anyone to think we do not provide information that is requested from us.

An obstacle was created to today's discussion in respect of data protection. I am simply saying that the HSE and Rehab will have to work out an arrangement so that there is no lacuna of information if the taxpayer gives the organisation €95 million in 2014.

Mr. Keith Poole

Without trying to push back on the Deputy, with respect, we were not "given" the money; we did something for receipt of it.

Yes, some of it was work for which Rehab contracted. It tendered for much of the work.

Mr. Keith Poole

There are service level agreements for everything we do with the HSE. There are contracts for everything we do with SOLAS. On the wage subsidy scheme we make returns every week to the Department of Social Protection. In defence-----

That section 39 agreement with the HSE was Rehab's biggest funder.

Mr. Keith Poole

Yes, we have all those in place.

Up to now, would Rehab have given the HSE full details of pension payments and packages?

Mr. Keith Poole

Yes.

Would Mr. Poole expect that to continue?

Mr. Keith Poole

Yes, and as I outlined, our defined-benefit pension scheme unfortunately had to be wound up leaving our staff with defined contribution pensions of only 6%. The HSE can see that with no problem.

Before the meeting of 27 February I spoke with HSE people who deal with Rehab intimately at a very senior level. I asked them their opinion on what was going on at the time. Their uniform response was that they did not understand the attitude of certain people in Rehab. They said while Rehab provided services very well and they were very happy with them, they did not understand why certain individuals were not forthcoming regarding some basic information that was not, in their opinion, a big deal. The meeting of 27 February was an exercise in unnecessary prevarication and obstruction. I was not the only one to say that at the time. When I consider the issue over the past three or four months I use the word "unnecessary".

Notwithstanding Mr. Governey's hands-up admission that Rehab knows what it did wrong and the damage that has been done to it, this has been going on for six months, going back to CRC and St. Vincent's Hospital. There was always going to be an implication for Rehab. Our direct involvement with Rehab probably began in January this year. When did the penny drop with the board members regarding the need for a change of direction? When did it dawn on them that the damage being done to the organisation and the entire charity sector was very considerable? I accept everything Mr. Governey and Mr. Kerr said regarding an agenda for change, but it has taken a long time. Did the board consider the damage to the charity sector over the last three or four months?

Mr. Hugh Governey

I cannot name the day or week the penny dropped. It took more than a few days for the penny to drop as to the extent of the damage that has been done and, perhaps, continues to be done to Rehab and the entire charity sector. We do not feel particularly good about that.

Did the Rehab board discuss it privately or in board meetings? Did it push it to the side or was it a matter of ongoing discussion in the board?

Mr. Brian Kerr

The board discussed the situation over the last few months. As it was getting worse we were taking more action to try to put it right. Although we thought we were putting it right, it appears from what has happened that we were not. We hope from now on that it will be put right.

Did the board approach the CEO, Ms Kerins, after the last meeting? Was the board the catalyst for her departure?

Mr. Brian Kerr

As I said before, Ms Kerins was not well. The strain was noticeable, and she felt it was time for her to try to get better.

Did any board member ask Mr. Flannery to cut all links with Rehab and leave all his board memberships or was it voluntary?

Mr. Brian Kerr

That was also voluntary.

Did any board member speak to either individual regarding their concerns about the damage being done to the organisation? The witnesses understand what I am asking. The board had discussed their concerns, but did any member speak to either individual and tell them the situation was ridiculous? I do not believe they did not.

Mr. Brian Kerr

We did. From time to time we discussed the matter.

What did the board members say to them?

Mr. Brian Kerr

We said exactly what the Deputy said, namely, that damage was being done and it had to be rectified.

What was the response?

Mr. Brian Kerr

That it would be.

Was that a continual process of board members going to the two individuals, explaining the situation and the damage being done?

Mr. Brian Kerr

It was not continuous, but happened from time to time at board level.

Mr. Declan Doyle

In the chairman's opening statement he said, "In part, this is because the business and governance structure of the Rehab Group was not adequate to manage a challenging and changing situation." He went on to say, recognising the kind of shortcomings the Deputy refers to, "In addition, we recognise that, as a board, we have not exercised strict and appropriate oversight of certain issues that have come to public attention in recent weeks." The board cannot add much more to that. We have addressed the issues, probably in a tardy fashion. I do not dispute that.

Mr. Doyle knows what I am saying. It has gone on for months and Mr. Doyle has known some of these people for ten or 15 years. They were actively involved and employed in his organisation. Everybody in the country knew what was happening in the section 38 and section 39 sector. The board knew this was coming. It was well flagged months ago that the committee had brought up the issue. Considering the turnover of the organisation, half of its income, or more, was public money. We have gone through that ad nauseam. Did anyone say Rehab had a serious problem considering the arguments the committee was making? Rehab was accepting the amount of money from the State while trotting out the line that it was a commercial organisation, and nobody was buying it because Rehab was wearing two hats. Why did it take so long for Rehab to deal with this definitively? I do not understand it.

Mr. Hugh Governey

I have been at practically every board meeting over the last year and have been newly appointed to the remuneration committee, God love me. We would be far better to stop the post mortem. Clearly there are questions the members have asked to which they are perfectly entitled to answers. We have answered them to the best of our ability. We meant what we said in each of our three opening statements. Much thought went into their preparation by the chairperson.

The part of this that is missing-----

Mr. Hugh Governey

Could I finish? We are looking to the future of Rehab Group and its 2,500 employees, many of whom are probably watching this on screen.

I refer to what Deputy Harris said earlier. I just think that one of the most awful things about the situation we are in at the moment relates to somebody on the front line and maybe 2,500 people on the front line. We meet them on a daily or weekly basis when we go down to Roslyn Park. They are doing an outstanding job no matter what level they are at. They are doing an outstanding job and they are so proud of Rehab. At least they were so proud of Rehab.

Hang on a second.

Mr. Hugh Governey

I will finish in a moment.

Hang on a second. Mr. Governey is not going to take all of my time. I think he is repeating.

I ask Mr. Governey to finish.

Mr. Hugh Governey

I am just about to finish. We are determined to put Rehab back where Rehab was and to have it as an organisation that every one of our employees and every one of our volunteers and every one of our clients, that is, the people who are receiving our services, are delighted to be associated with Rehab. I again will be delighted to be associated with Rehab because I am not particularly proud at the moment of where I am sitting.

As I said initially, when I spoke to the representatives of the HSE, they were the ones who acknowledged how good a job Rehab does.

Mr. Hugh Governey

Correct.

I agree with Mr. Governey's point with regard to post mortems and I was getting to that. This is the reason I was asking about Mr. Governey's interaction with these two individuals over the past three months - what they were talking about collectively and what he was saying to these two individuals as this was rolling out.

We are talking about considering compellability. The media are asking where we are going from here given that those people have not come to appear before the committee. I am asking where the end to this damage is - not just to Rehab, but to the entire charitable sector. That is what I am getting at. I am not interested in the post mortems. If the board stays and part of the board survives this, how will it deal with that legacy issue that everyone is wondering how to deal with? If those two individuals - two warm bodies - do not appear before this committee, how will Mr. Governey resolve this for his organisation? If everybody on the board resigns tomorrow, we still have the problem of dealing with the two people who did not appear before the committee. I need that answer.

Does Mr. Governey speak to these people every day? He has known them for ten or 15 years. They owe it to Rehab and to the charitable sector to come in here and deal with this once and for all. Mr. Governey should be calling these people and saying we have had enough of this. The public has enough of this. I think the media has had enough - maybe not the media. I am not trying to be funny. Mr. Governey understands what I am getting at. I want to get to the end of this. I accept everything he has said and putting his hands up is fair enough. However, there comes a point when we are repeating ourselves in the questioning and Mr. Governey must give us some kind of realistic answer as to how we end this once and for all, and put it to bed.

Mr. Hugh Governey

Speaking for myself, in relation to that very valid point the Deputy makes, I would like to think - the chairman will confirm - that first of all we had hoped that the two former chief executives would be here today. For reasons we have gone through many times, they are not here today. We will use our best endeavours to ensure that they co-operate with the work of this-----

What does that mean exactly? Can I take that at face value? That is fair enough.

Mr. Hugh Governey

They are no longer employees. We have no control over them, but we can appeal to their sense of commitment to Rehab which they had, in Mr. Frank Flannery's case for 30-odd years and in Ms Angela Kerins's case for 20-odd years and six or seven years as chief executive. They had passion for the whole charity sector. If it is the case that after today and after tomorrow damage is still being done to the charities sector and to Rehab as a result of their non-appearance before this committee, we will do everything humanly possible that we can do within the law. Maybe this committee has greater powers than we have - powers of persuasion or otherwise. I cannot say any more than that.

I have a number of questions. I raised the issue of Mr. Horgan earlier. Can Mr. Poole give any information on that?

Mr. Keith Poole

Mr. Horgan did leave the organisation, but it is subject to a confidential agreement so I cannot divulge that.

He did not leave the organisation without a contest, without some difficulty between both parties. Is that correct?

Mr. Keith Poole

Yes, that is correct.

Did he receive a substantial lump sum when he left?

Mr. Keith Poole

I am really sorry. I know the Chairman is pushing me on that point, but I cannot because I was involved in the-----

He was involved with the coffins.

Mr. Keith Poole

Yes.

He reported directly to Ms Kerins.

Mr. Keith Poole

Yes. I have said that.

Is that right?

Mr. Keith Poole

Yes.

He was forced to leave the organisation.

Mr. Keith Poole

I cannot say that and I am sorry I cannot say that.

I am saying it. I believe that is the case. I understand he received a six-figure settlement. As is usual with all of these things, there is now a confidentiality clause. It is wrong to say he left the organisation. There was an issue that arose about these coffins and that is why he left. That is why he was pushed, I suggest.

Mr. Keith Poole

I understand the Chairman suggests that, but I cannot link the two events. I am sorry.

I will come back to that again.

Rehab apparently sold the coffins. What was the value of the coffins it had? How much did it pay for the stock of coffins it had and then sold?

Mr. Keith Poole

From recollection, I think it was around €80,000.

Was that before or after they were worked on by the staff in Rehab?

Mr. Keith Poole

Before.

So it was in excess of €80,000. It was an €80,000 cost to Rehab before the Rehab Enterprises section added value to the coffins. Having added value to this €80,000 lot of coffins, Rehab sold them for €20,000. To where?

Mr. Keith Poole

I genuinely do not know the answer to that.

Does Mr. Poole know where they are?

Mr. Keith Poole

I have no idea. It was in 2010.

I come to TBG - is that the name of it?

Mr. Keith Poole

TBG Learning.

That is in England, is it not?

Mr. Keith Poole

It is, yes.

Who did Mr. Frank Flannery bill for these figures we have before us?

Mr. Keith Poole

Initially he billed Rehab Group and then he billed TBG Learning.

Was it for the same amount of money?

Mr. Keith Poole

The amount is there - the total.

The amounts Rehab has given the committee today-----

Mr. Keith Poole

Are the totals.

----- were invoiced to Rehab Group.

Mr. Keith Poole

Some were and some were invoiced to TBG Learning in the UK.

Mr. Keith Poole

I guess he was doing some work for TBG Learning. I was not involved in controlling this.

Who was?

Mr. Keith Poole

Ms Kerins.

Mr. Keith Poole

No. There was another colleague, Mr. Conlon-Trant, who was involved in that. He was responsible for some of the UK activity. All I can give are the facts, unfortunately. It was billed through the UK.

Did he get paid €70,000 from the UK?

Mr. Keith Poole

The figures are there.

No. I have the figures here that Mr. Poole said Rehab paid him.

Mr. Keith Poole

The figures I gave the Chairman are net of VAT.

The UK subsidiary, according to the 2011 audited accounts, paid Laragh Consulting Limited €70,000 for consultancy services in 2012.

Mr. Keith Poole

I am sorry; I do not have that in front of me. The difference between what was disclosed in the UK company and what is disclosed at the top level is VAT.

So Mr. Poole is saying it is probably €66,000.

Mr. Keith Poole

Net.

Mr. Poole is accounting for that as having been paid from Rehab Group.

Mr. Keith Poole

No. Those are consolidated accounts, so we disclose anything that is paid to a director of the group from any subsidiary company.

In that case were all these amounts paid from TBG Learning or were they paid from Rehab Group?

Mr. Keith Poole

Prior to Mr. Flannery's appointment as a group director they were paid by the Rehab Group.

What year?

Mr. Keith Poole

2011.

So, prior to 2011 he was paid all of these amounts of money and after 2011, he was paid the other three amounts from the UK.

Mr. Keith Poole

Yes.

Why was that?

Mr. Keith Poole

As I said, the only explanation I can give is that I was not responsible for this consultant and that he was doing some work for that entity.

Am I correct that he became a director in 2011?

Mr. Keith Poole

Yes.

The payments then shifted from Rehab Group to a subsidiary in the UK.

Mr. Keith Poole

Yes.

Is that not unusual?

Mr. Keith Poole

It is; that is what I am saying.

Mr. Poole can say it because it is unusual. Were other payments made to any other director or in any other way by TBG?

Mr. Keith Poole

No.

None whatsoever?

Mr. Keith Poole

No.

So, this payment from TBG over those three years was simply to facilitate the fact that Mr. Flannery was a director on the board at that time.

Mr. Keith Poole

I do not know. What I have been told is that he was doing some work for TBG Learning. I am sorry, I was not involved in supervising this. I can only tell the committee the facts and the facts are that he was paid by TBG Learning from 2011.

I thought that during those years he was doing work for the lottery scheme.

Mr. Keith Poole

Yes, some for the lottery scheme and some for the-----

Why would TBG pay him for working for the lottery scheme?

Mr. Keith Poole

It is all part of Rehab, I suppose.

Mr. Poole cannot suppose here; we have to get the facts.

Mr. Keith Poole

I understand that.

Mr. Poole is not giving us the facts.

Mr. Keith Poole

I am giving the facts in so far as I know them, which is-----

Mr. Poole was there for 18 years. He is the one that is accounting for these figures.

Mr. Keith Poole

I am, yes.

Did it not disturb Mr. Poole that those payments changed in this way for those years?

Mr. Keith Poole

I suppose the answer is that I look at Rehab as a total entity. The Chairman is asking did it disturb me. VAT was paid on all of them. There is no tax avoidance or-----

Except that the money was being paid to a company that was dissolved.

Mr. Keith Poole

I accept that.

Did TBG know that this company had been dissolved?

Mr. Keith Poole

Not at the time, no. The first person who discovered that was myself.

Are there tax implications for Rehab and TBG in relation to those payments?

Mr. Keith Poole

No, not as far as I have been advised.

In relation to the other moneys, the UK company paid Rehab £450,000 in 2012.

Mr. Keith Poole

Right.

And £1.25 million in 2011.

Mr. Keith Poole

I will explain. If the Chairman looks at the chart, he will see there is a charity in the UK called Rehab.

Okay. I see that.

Mr. Keith Poole

What happens is that TBG Learning donates money to the entity Rehab, which is a UK charity. That UK charity then donates money to our other UK charities. For instance - I do not have the exact figures - they would donate money to Haven Industries in Scotland and Momentum in Scotland. I accept that it is confusing but there is a separate company from Rehab Group called Rehab in the UK.

At the end of all of the recycling of the money, does Rehab get £1.2 million?

Mr. Keith Poole

No, that was a separate amount that came back to the Rehab Group.

That is what I am saying. At the end of all of this Rehab Group got £1.2 million, sterling, I presume?

Mr. Keith Poole

Yes, but that is for one year. In other years we donated-----

Rehab got £1.2 million in 2011.

Mr. Keith Poole

Yes.

In 2012, it got £450,000.

Mr. Keith Poole

No. As far as I can recall the £455,000 went to other charities in-----

The UK company paid a gift to Rehab.

Mr. Keith Poole

But Rehab is the UK entity.

It is the UK entity?

Mr. Keith Poole

Yes.

But Rehab Group did get the £1.25 million?

Mr. Keith Poole

Yes.

Okay. Can Mr. Poole name the director who was paid £85,000 in 2010? This figure is listed on page 13 of the UK's companies accounts for 2011. Does that director receive other fees from Rehab Group?

Mr. Keith Poole

Sorry, I do not know. I do not have the accounts in front of me.

Perhaps Mr. Poole would check it out.

Mr. Keith Poole

I will, of course.

I am reading it correctly. On page 13, it states that £85,000 was paid in 2010.

Mr. Keith Poole

Okay, Chairman, sorry, I can answer that now. I think that relates to an employee who was also a director of that company.

A director of which company?

Mr. Keith Poole

TBG Learning. He was a UK resident and was the managing director.

As I said, the 2011 accounts record €70,000 in respect of consultancies for 2012. Were these amounts paid directly to Mr. Flannery, in the name of Mr. Flannery?

Mr. Keith Poole

I think they were. Certainly after January 2013 they were paid directly to Mr. Flannery.

Before that?

Mr. Keith Poole

Before that, as far as I am aware they were paid to the company, Laragh Consulting.

Mr. Poole has undertaken to get us a list of the services that-----

Mr. Keith Poole

The descriptors.

Yes, the descriptors for each of those years.

Mr. Keith Poole

I will check the files and share it with the committee.

Does Mr. Poole have the files or were they solely for Ms Kerins?

Mr. Keith Poole

I have the invoices. I think I have been given some things of Ms Kerins. I will have a look at it and will provide the committee with anything from those files that I can provide to it.

On Clashganny Mills Trust-----

Mr. Keith Poole

I can deal with that also. Clashganny Mills Trust bizarrely enough was a company that was struck off the register. We had to go down to the High Court to get it put back. The Chairman might ask why we still have it, which is because it just recently sold an item to UCC called the Great Book of Ireland. The committee may have heard of it.

Yes. There was nothing else unusual about that trust.

Mr. Keith Poole

Before it came into the Rehab Group it had not filed accounts and it was struck off the register. We had to do 12 years accounts and put it back on the register. I am very familiar with what is involved in putting a company back on the register as a result of that.

I would like to return to a question asked about information given to the HSE. Perhaps Mr. Poole will explain to the committee why he would tell the HSE to under no circumstances tell this to the Committee of Public Accounts.

Mr. Keith Poole

I will try, if I might. As the Chairman knows, I was not involved at the last meeting. I believe it was all to do with data protection. The HSE was given the information under our service level agreement. The point under the service level agreement is for it to verify the information. The people who are on that list, who are not the seven people mentioned today, had not given their permission for that information to be disclosed. I think that is what happened.

The HSE would understand that because it is familiar with data protection. In fact, on the last occasion when the HSE appeared before us, a representative quoted the legislation to us. Why would Mr. Poole consider it necessary, therefore, to specifically instruct the HSE not to disclose the information to the Committee of Public Accounts?

Mr. Keith Poole

I did not give that instruction.

Someone did.

Mr. Keith Poole

Someone did, yes.

Who signed the letter to that effect?

Mr. Keith Poole

I do not know, Chairman, but I will find out.

We need to know.

Mr. Keith Poole

Absolutely. I genuinely believe it was purely to protect people whose information was on the sheet that had been given to the HSE under the service level agreement for a particular reason and those people had not given their consent for it to be used for any other reason. That is my understanding of it, Chairman.

In 2008, Rehab paid someone, perhaps Mr. Flannery, €68,750 for consultancy work and was paying its senior executives in the region of €200,000. I know Mr. Poole cannot comment but he will agree they were well paid and looked after. There were bonuses forgone, etc., and arrangements were in place.

Mr. Keith Poole

For the record, I told the Rehab Group that I was waiving my bonus forever from 2011. I did not just waive it for that year, I waived it forever.

How does Mr. Poole think the person who worked for the group for 17 years feels now about all of the figures that are being talked about in the public domain, given this person was at that time in receipt of €37.20 per week?

From that there was a deduction of €9.30. The group seems to have generally looked after senior executives and management but this particular person, who had been 17 years with the group in 2008, was going home with that kind of money. It is something to reflect upon.

Mr. Keith Poole

Absolutely. I can only agree with the Chairman.

This person has pride in the services of the organisation but cannot believe what is being relayed about the management and payments that were being made. I will quickly ask about two other areas. How much was paid to consultants each year for public relations?

Mr. Keith Poole

Anticipating the Chairman's question, the only consultant I pulled out was Insight Consultants from 2013. I can provide the figure.

Was that just for one year?

Mr. Keith Poole

Yes.

Was the company not engaged previously?

Mr. Keith Poole

Yes, and we can provide the figures if required.

Yes. Has Mr. Flannery any association with the company?

Mr. Keith Poole

That is a question to be asked of Mr. Flannery or people from the company.

Mr. Poole does not know.

Mr. Keith Poole

I do not know.

The witnesses might let us have the information requested. Having heard all of this, does the Comptroller and Auditor General have any questions for the witnesses?

Mr. Seamus McCarthy

No.

I want to revisit the issue of the coffin manufacturing in light of a piece of information that has come to me in the course of the meeting. I am happy to provide it to the clerk, if appropriate, so as to share it with other members. We have established the very strange turn of events where a family relationship was declared in November 2009 with the company not established until December that year, and we do not have an explanation in this room for that. We have established that Ms Kerins absented herself, according to the minutes and witness reports, from any dealings with the issue of the coffin enterprise. Did Mr. Poole have any involvement in this coffin plan?

Mr. Keith Poole

The Deputy can see from the minutes that if Mr. Horgan had a difficulty, he should have come to me. My involvement was that he showed me a business plan on what I believe was 18 December that year. From recollection, it looked as if it would make some money and after that Mr. Horgan carried on, so that was my involvement.

I thank the witness. A copy of an e-mail has been passed to me which seems to have been sent from Mr. Horgan to Mr. Poole on 18 December that year. The subject line is "coffin business plan", which tallies with Mr. Poole's account. It states "Attached please find further document for discussion at our meeting this afternoon". It is interesting that not only was it sent to Mr. Poole but it was also sent to Ms Angela Kerins. This is 18 December 2009 and Complete Eco Solutions had been established with Ms Kerins's husband, her brother and Mr. Flannery as the directors and shareholders of the company. The witnesses have told us Ms Kerins has absented herself from any dealings with the issue. Why would Mr. Horgan e-mail her and state "Attached please find further document for discussion at our meeting this afternoon"? I have the document here if other colleagues wish to see it. Does Mr. Poole or Mr. Kerr have an explanation for that?

Mr. Brian Kerr

I am not aware of that.

Mr. Keith Poole

Apparently, Ms Kerins has previously stated publicly that she asked him not to send any further updates.

Mr. Keith Poole

Ms Kerins has previously stated publicly that she asked him not to send any further updates. That is all the information.

Where did Ms Kerins state that?

Mr. Keith Poole

Apparently she stated that in the media.

I am not aware of that. This just gets stranger at every turn. Does the witness know how this looks? To the innocent eye, it looks as if this business was set up specifically with family members of Ms Kerins, along with Mr. Flannery, in order to make a profit as an intermediary in the supply of these coffins. It suggests that perhaps people at the most senior level of Rehab regarded the organisation as something like a personal fiefdom and that they could break rules with impunity. We have two conundrums, with the former chief executive making a declaration around a company before it exists but stating she will stay away and not involve herself in commercial considerations of the business. I have just received this document and I have no way of telling if it was an isolated e-mail or one of a series, but Mr. Horgan e-mailed Ms Kerins on 18 December 2009 at 2.14 p.m., referring to the "coffin business plan". The witness can appreciate how it can be clearly inferred that, far from absenting herself from considerations of these matters, Ms Kerins was very much in the loop. Would Mr. Kerr accept that it looks that way?

Mr. Brian Kerr

Yes, from what the Deputy is saying.

Does that trouble Mr. Kerr?

Mr. Brian Kerr

Yes, it would.

Is there a means of getting to the bottom of this matter for us?

Mr. Brian Kerr

I will certainly ask questions.

Will Mr. Kerr report to us?

Mr. Brian Kerr

I will certainly do so.

Will there be a trawl of documentation to establish whether this e-mail is isolated? Could Mr. Poole shed some light on the matter?

Mr. Keith Poole

Unfortunately, I delete my e-mails on an annual basis, but we will go back to see if there is anything in the files.

The meeting was on 18 December 2009, but who attended it?

Mr. Keith Poole

From recollection, it was Mr. Michael Horgan and me.

Ms Kerins did not attend.

Mr. Keith Poole

No.

Is Mr. Poole absolutely certain of that?

Mr. Keith Poole

I am pretty certain. I apologise, as it was a long time ago, but if the question must be answered "Yes" or "No", I would say that from recollection Mr. Horgan and I attended the meeting.

Will Mr. Poole check that, in as much as he can?

Mr. Keith Poole

Yes.

Does Mr. Poole have any contact with Mr. Horgan?

Mr. Keith Poole

Yes.

Could he check it with Mr. Horgan and ask for his recollection of the meeting?

Mr. Keith Poole

Sure.

Mr. Kerr stated damage has been done to Rehab. Who has done the damage?

Mr. Brian Kerr

It is an overall issue. We have done the damage to ourselves and from the outside, looking in, it probably looks appalling.

Has Ms Angela Kerins damaged Rehab?

Mr. Brian Kerr

The whole group has been damaged.

Has Angela Kerins damaged Rehab?

Mr. Brian Kerr

The whole group has been damaged.

No, Mr. Kerr should answer the question. Has Angela Kerins damaged Rehab?

Mr. Brian Kerr

I cannot blame individual people.

I am not asking Mr. Kerr to apportion blame. I am asking him to answer the question. Has Angela Kerins-----

Mr. Brian Kerr

Collectively, we have all been damaged.

Has the former chief executive damaged Rehab?

Mr. Brian Kerr

I would like to answer the Deputy in a direct fashion-----

Mr. Brian Kerr

-----but I am not going to do so.

Has Mr. Frank Flannery damaged Rehab?

Mr. Brian Kerr

I am not going to do that.

Would any of Mr. Kerr's colleagues like to give a more direct answer to those questions? What about Mr. Doyle?

Mr. Declan Doyle

I will not give a more direct answer, but the Deputy should recognise that over his long career in Rehab, Mr. Flannery built an organisation that delivers - as everyone agrees - an excellent level of service to people who would not otherwise have had their needs met. Ms Kerins also worked tirelessly on behalf of this organisation. It is most unfortunate how things have turned out but I am certainly not going to point the finger at anyone. Collectively, as an organisation and at board level-----

Have their recent actions damaged Rehab?

Mr Declan Doyle

All of Rehab and particularly we as a board have not behaved as expeditiously as we should have. I will not say anything about Angela or Frank.

This is the board that will lead the transformation.

Mr Declan Doyle

We are the board that is going to work with Dr. Eddie Molloy to ensure the transformation takes place and that this organisation can continue to carry out its mission.

Notwithstanding the witness's lament that those two individuals did not appear before the committee today, he is not in a position to say, fairly and squarely, that both of those individuals have damaged Rehab.

Mr Declan Doyle

I will not place myself in the position of judge and jury for those two individuals.

Does the witness believe that the view of the workforce of Rehab is different from his?

Mr Declan Doyle

The Deputy would have to ask the workforce that.

Indeed. How many home helps does Mr. Kerr employ?

Mr. Brian Kerr

I have no idea of the number.

Do any of the witnesses know?

Mr Declan Doyle

It is approximately 160.

What do they earn? What is their hourly rate?

Mr Declan Doyle

It is not a matter that comes before the remuneration committee but perhaps the Deputy knows.

Is the witness asking me?

Mr Declan Doyle

I do not know. We will have to find the information and let the Chairman know.

Would it interest the witness to know that they are paid significantly less than their HSE counterparts?

Mr Declan Doyle

It would surprise me because these salaries tend to be benchmarked. However, I cannot comment because I do not know.

Could the board inform itself and report back to us?

Mr Declan Doyle

We will.

Does it strike witnesses as contradictory that whereas the general management team is pegged to private industry, many of the front-line staff are not even pegged to the public sector? In fact, some of them are paid below what would be considered the benchmark within the public sector.

Mr Declan Doyle

I need to check those facts but, in general, our employees who work for the HSE and work with SOLAS are benchmarked, arising from a union claim that was made four or five years ago. They sought benchmarking in line with public sector wages, and that happened in both of those organisations. I cannot talk about the home helps because I am not familiar with it.

Could board members inform themselves and refer back to the committee with that information?

Mr Declan Doyle

We can do that.

Does Rehab publish accounts for the Rehab Foundation company?

Mr. Keith Poole

No, we do not.

Can the witness give the reason for that?

Mr. Keith Poole

It never has. The company was always guaranteed by the top entity, that is, a part of the top entity effectively. If one looked at the accounts, it is money in and money out, so they would not give much information.

They might. It would demonstrate where the money in was coming from and where the money out-----

Mr. Keith Poole

The money in comes from fund-raising.

Yes, but it would itemise the fund-raising efforts.

Mr. Keith Poole

It would just show a total figure.

Is there a reason it could not be itemised?

Mr. Keith Poole

I can provide them to the committee without a problem.

People who have dedicated their time and energy to fund-raising efforts on behalf of Rehab would expect that the fruits of their effort and the moneys gained would be set out in an absolutely clear and transparent manner, item by item. I do not think that is too big an ask of the organisation.

Mr. Kerr or Mr. Governey said that they wished to get Rehab back to where it was.

Mr. Brian Kerr

Yes.

To be helpful, I suggest that Mr. Kerr should not wish to get Rehab back to where it was. The purpose of the exercise is to move Rehab to a very different place, if I understood Mr. Kerr's opening statement correctly.

Mr. Brian Kerr

That is a fair comment.

Can the information on Complete Eco Solutions and the information I sought earlier in terms of the moneys into the Rehab Group and the ratio of taxpayers' money, charitable donations and commercially generated income be set out very clearly for the committee?

Would Mr. Kerr now make a public appeal to both former CEOs, Angela Kerins and Frank Flannery, to make themselves available to attend this committee?

Mr. Brian Kerr

It would be more than helpful if they did.

So Mr. Kerr is asking them to do so.

Mr. Brian Kerr

I would like to see them here.

Mr. Kerr is asking them to do so.

Mr. Brian Kerr

I would like to see them here.

I will take that as Mr. Kerr asking them-----

Mr. Brian Kerr

I would like to see them here.

-----to appear before this committee.

We are concluding but Deputy O'Donnell has a few quick questions.

I asked Mr. Poole previously about the total wages. He provided a document earlier in which he gave the management charges from RehabCare, National Learning Network, Rehab Enterprises and Rehab lotteries and fund-raising. There is a heading entitled "director of services division" and there is €140,189 in RehabCare, €140,134 in National Learning Network, in Rehab entertainment there is a figure of €69,203 and in Rehab lotteries and fund-raising there is a figure of €91,730. To what does that relate?

Mr. Keith Poole

It is a portion of their salary.

Mr. Keith Poole

The director responsible for that.

Does any of that charge relate to the CEO? Is there any management charge for the CEO put into the companies?

Mr. Keith Poole

No. I covered that earlier.

Yes, but I just wished to be certain. Looking at the salaries there, am I correct to say there is €12 million in income coming to the Rehab Group?

Mr. Keith Poole

Yes.

Of that, €4.7 million comes from shared services and the charity lotteries is €3.1 million. In essence, the shared management services makes up 53%-----

Mr. Keith Poole

That is correct. I was going to give the committee that figure.

-----of the €8.9 million outside of the charity lotteries to bring it up to €12 million.

Mr. Keith Poole

Yes; I had 52%.

It is 52% or 53%. Of the shared management services, €3.55 million comes from National Learning Network and RehabCare, which are companies that are funded virtually entirely by the State. They account for approximately 40% of the €8.9 million. Is it a fair observation that 40% of the CEO's salary is funded by the taxpayer? Will Mr. Poole respond to that as an accountant?

Mr. Keith Poole

As an accountant, one can look at it any way.

As Mr. Poole is well aware, figures never lie. Looking at the figures, the shared management service is coming from the two companies that are funded virtually entirely by the taxpayer, whom we represent. The figure from National Learning Network is €1.511 million and for RehabCare it is €2.039 million, which is a total of €3.55 million. Mr. Poole said the charity lotteries, which is €3.1 million of the €12 million, is used for a specific purpose.

Mr. Keith Poole

Absolutely.

That leaves €8.9 million, and €3.55 million of that comes directly from money provided by the taxpayer.

Mr. Keith Poole

Yes.

That is 40% of €8.9 million.

Mr. Keith Poole

Yes.

So it is fair to make the deduction that 40% of salaries that are paid by the Rehab Group company are funded by the taxpayer.

Mr. Keith Poole

Yes, based on the income that comes into the top entity.

That is the purpose of today's meeting.

Mr. Keith Poole

I understand that.

Therefore, 40% of Ms Kerins's salary, at a minimum, was funded by the taxpayer. The second question relates to the terms of reference for the Towers Watson report. Who set those terms of reference?

Mr Declan Doyle

The remuneration committee.

For comparative purposes, Concern would be an organisation with a similar turnover. I believe, if I am correct, that €128,000 is paid to the CEO. If one looks at it in terms of the Irish set-up, and we looked at it prior to Mr. Poole bringing in the information, well in excess of 70% of the income is funded by the taxpayer.

A lot of the contracts are public in nature. Why did Rehab persist in applying an industry benchmark as distinct from the charities sector?

Mr. Declan Doyle

Typically we looked, and had always looked, at the general industry as the best place. For example, accountants and various other people like that might move in from general industry. Therefore, it seemed to us to be an appropriate benchmark.

As I said at the outset, with the wisdom of hindsight we should have taken more account of the charities sector earlier on. We should have included them in the mix both in Ireland and perhaps overseas because there is a very small pool and there are very few charities of a similar size to us in the Irish market. Needless to say, there probably are people overseas that we could have drawn in but we will be doing that.

In conclusion, no one denies the great work Rehab has done but, equally, we are elected by the people to do a job which boils down to the following. In terms of Rehab's overall funding, 52% comes from the taxpayer and, in terms of its Irish operations, the figure is well in excess of 70%. Plus, over 40% of the former CEO's salary was funded by the Irish taxpayer. We, as politicians, are in a position where we must ask the questions and there are further questions to be asked. First, I acknowledge the work done by Rehab as a group and by its staff. Above all I acknowledge the service users across the spectrum because they are our main concern. I speak in plural rather than singular terms. They are our major concern in the entire charities sector. I ask the delegation to assist us in whatever way possible to ensure that we reach a speedy conclusion on this charity module. We owe that to the people who organise collections up and down the country, to the service users and the ground staff in organisations like Rehab.

I agree with the Deputy.

I have a question for Mr. Poole about TBG in England. How much money do those companies get from the Department of Foreign Affairs and Trade?

Mr. Keith Poole

They do not. We get money from the Department of Foreign Affairs and Trade. From recollection, it is for an Irish elder service in Coventry. Please do not quote me but I think that it was about €50,000 last year and that is what they get from the Department of Foreign Affairs and Trade.

There are a number of them. For example, Rehab in the UK, Momentum, Rehab Lotteries, TBG Learning, Chelsea Trust-----

Mr. Keith Poole

Chaseley Trust.

Yes. They received £95,000 in 2012. Is that correct?

Mr. Keith Poole

From where?

The money came originally from the Department of Foreign Affairs and Trade.

Mr. Keith Poole

No. I will need to check.

The group received £95,000. I ask Mr. Poole to check the details.

Mr. Keith Poole

No. I can tell the Chairman that there is only one service in the UK that is funded by the Department of Foreign Affairs and Trade which is for Irish emigrants in Coventry.

By whom is it administered?

Mr. Keith Poole

It is administered by a company in Scotland called Momentum Care.

Is it associated with Rehab?

Mr. Keith Poole

Yes.

The funding is €50,000.

Mr. Keith Poole

I think I put it on the list of funding that I gave the committee.

That is okay.

I apologise for not being able to attend the beginning of the meeting. In this crazy institution two committees of which I am a member can sit at the same time. That was my problem this morning.

I wish to ask three questions that follow on from the recent questions posed by Deputy McDonald. Can the delegation assure me and us that all of the ordinary staff members in Rehab are paid according to national and public service norms?

Mr. Declan Doyle

To the best of my knowledge, yes, but I had better check to make sure. Questions have been raised about home helps but I do not know the situation that applies.

I would appreciate some information on that matter. It would be good if the delegation can fill us in on that issue in correspondence.

Mr. Declan Doyle

Yes, we will let the Deputy know.

My second question, out of three comments that I wish to make, relates to Frank Flannery's activities as a lobbyist. Perhaps my question was answered earlier and, if so, I apologise for asking the same question. Why did he lobby for Rehab? Who did he lobby? What were the successes of his lobbying?

We have asked for a breakdown of that information. Those questions were asked. A number of figures were presented to the committee. We have asked Mr. Poole to clarify them under the various headings because he does not have the information with him.

We are very much at a loss due to Mr. Flannery not being here.

I shall make my final comment. As someone who has worked in a CRC institution I am very conscious of how the ordinary staff in the CRC institutions have been deeply hurt by what has happened. Last weekend I had a conversation with an employee of Rehab in one of its subsidiary organisations. The individual told me that he is afraid to mention that he works for Rehab, in one of its subsidiary organisations, because of the reaction that he has got recently. That situation, and the huge negative impact this has had on the whole charity sector, has cut me to the quick as somebody who worked for such an institution. I know that the delegation has given assurances that the whole thing will be changed. In terms of change, does Rehab see a need to separate the core of its activities from making a profit?

Mr. Brian Kerr

There is a possibility that it could be seen as the right way to go. Quite honestly, we will await to see what Dr. Molloy might say about that one. It is worthy of a little bit of work and deserves looking at. We should do that when he comes to report to us.

This is my absolute final question. Is there a need to decouple making significant sums of money in Rehab's work from the whole charitable sector?

Mr. Brian Kerr

That would be desirable. If it can be gelled apart rather than together that would be a desire that we might have. However, we would have to look at the figures on each side to see how it would work because trying to fund two organisations might be the wrong way to go. We will not know until we see what the overall transformation situation is.

Mr. Keith Poole

In response to Deputy Dowds, there is a move within our public service to outsource and tender and I shall give a recent example. The Department of Social Protection recently put out to tender a programme called JobPath which is a work placement programme. We have partners in the UK - a plc in the UK - where we share a prime contract under the Department of Work and Pensions for the delivery of work programmes in Wales and the south west. We looked at that programme with our partners. Interestingly, it is a payment-by-results model and, therefore, one must get a job to get paid. That is the model that works in the UK.

The JobPath model that we looked at here was tougher than the UK model. I think, absolutely, we have said everything that we are going to say. In terms of services that are being delivered to this State, there is an issue whereby they are being "businified", for want of a better word, or turned into businesses.

Let us examine home care or home support, as mentioned by Deputy McDonald. The HSE is now looking to get people to enter half hour visits by tendering.

Perhaps we have been accused of being a little bit corporate but on the other side of that coin - and I am not disputing what has been said - there is a push from State agencies to get more value for money, more tendering and more private enterprise in the health services tendering for home care and home support work. That leaves organisations like us slightly schizophrenic because we are caught between being a business, charity and a service provider. We need to define ourselves but also to be cognisant that the funders - the Irish Government - is pushing for value for money. It is pushing organisations like ours to reduce costs, which is fine and laudable, but also putting services out to tender. An example is the Department of Social Protection scheme JobPath, which major players such as G4S and A4E looked at. I am not sure who submitted a bid but we looked at it and decided that it was too risky because we would never get the anticipated outcomes. There is a big push to get services out to tender and to get value for money. We cannot argue with that and it is great but we must compete with the private sector to a degree. I see more of that coming down the track.

In the UK, it is about getting someone a job and getting paid sustainment payments. The organisation gets paid every three months while the person is in a job. I am not knocking it but it is the programme being pushed out by the Department of Social Protection and it is the way opportunities are being presented to our organisation. To be fair to Ms Kerins, that is where she was coming from in respect of the commercial aspect. We are being driven all the time to compete against the private sector.

It is important that the human touch does not get lost in all of that.

Can the board members comment on the following point? The Irish corporate experience is littered with boards being dominated by one person, with disastrous results. I do not need to list them but it has happened in recent times, particularly in controversial areas. In view of the fact that Mr. Kerr honestly came forward and said that Rehab had made many mistakes and had huge gaps in its corporate governance, is that because it is a weak board that was dominated by one individual for a long period of time?

Mr Brian Kerr

It could be seen to be that.

What does Mr. Kerr think?

Mr Brian Kerr

I think the board could have been stronger and the board will be stronger. It has learned a lot and with the help of Dr. Molloy we are going in the right direction.

Can Mr. Doyle comment on that?

Mr. Declan Doyle

Unlike other organisations the Deputy is talking about, Rehab is solvent and is delivering an increased level of service each year. We have increased our employment through the very difficult past five or six years and we have expanded our activities overseas. In many ways, the organisation is an Irish success story in these difficult times and there are few enough of them. The reason my colleagues and I are involved is because of the people who depend upon Rehab for support. We have no other interest or remote motivation to get involved in Rehab.

Can Mr. Doyle address the question I asked?

Mr. Declan Doyle

I think I am addressing the issue.

No. Does Mr. Doyle think he was dominated by one person and that the board was dominated by one person over two successive chief executive periods?

Mr. Declan Doyle

I do not think so. The board was quite questioning but perhaps, in certain areas, we could have been tougher.

Can Mr. Governey comment on that?

Mr. Hugh Governey

I have only been on the board with one chief executive who, in my view, has made some errors of judgment. In the overall scheme of things, she did an outstanding job and was an outstanding ambassador for Rehab Group and the charity movement in Ireland and in Europe. I am on quite a number of boards and have been for many years. I know exactly the kind of scenario the Deputy is describing. The board has not been dominated by the chief executive. The board is a challenging one, challenging proposals, decisions and situations that arise, as it should do. Some members of the board are more vocal than others and some prefer to have conversations with the chief executive in private. One of our problems has not been because of a dominant chief executive.

Would Mr. Poole like to comment on that?

Mr. Keith Poole

No.

Mr. Keith Poole

I just do not want to comment on it.

Is it fair to say the chief executive was dominant? Was she a good chief executive? Did she push the board around or did the board stand up to her?

Mr. Keith Poole

As Mr. Governey said, much good stuff has been done in her tenure.

Does Mr. Poole have any reservations?

Mr. Keith Poole

She was a forceful individual but that was a great asset for the organisation.

And Mr. Hogan?

Mr. Liam Hogan

I will use the term "extremely successful" rather than "dominant". That is the evidence. Very often, dominant CEOs destroy an organisation but she has made it extremely successful.

The organisation has come to a pretty pass under her leadership. It is a funny definition of success.

I thank the witnesses for coming along and providing the information in the way they have. The witnesses have been helpful to the committee and have cleared up the nub of the issue, which was defended at the previous meeting, that Rehab gains its funds for salaries from commercial operations. I do not believe that Rehab is a commercial organisation. Within this country, Rehab has substantial funding from the State and the public. Rehab must reflect on this, as must Dr. Molloy.

With regard to Deputy Ross's point, the board was not adequate in its response to many issues that faced Rehab. To a large degree, the dominant figure, the CEO, was allowed to conduct affairs without question. The payments made on behalf of Rehab were made to an individual without procurement. That is a matter for the board but was never questioned. Another issue is that the payment was made to a company that had been dissolved and was not registered. The contribution of the witnesses to the meeting gives the lie to some of the matters raised in letters on behalf of Ms Kerins's legal team and on behalf of Mr. Flannery. Clearly, the witnesses were treated fairly although the Rehab view is different and it has expressed that in its press release. It is also true that, in view of the fact the money was pooled centrally in Rehab Group with various salaries paid out of it, it was taxpayers' money.

The money was being recycled through the various entities and ended up by way of different management fees, structures and so in the Rehab Group from which payments were then made. There were also gifts from the United Kingdom.

In my opinion the Rehab Group is not a commercial entity. It relies heavily on the taxpayer and without taxpayer's support, it would not exist. We have to reflect on that. That brings me to the issue in respect of Mr. Flannery and Ms Kerins. Substantial questions need to be answered in the context of the work of the Public Accounts Committee. I recognise the data protection issues in respect of their retirement packages and so on, and indeed in relation to the settlement reached with the individual who dealt with the coffins issue. That information should be in the public domain. I know that we as legislators passed a law in relation to data protection but there are times when one would like to see that legislation challenged. I wonder would they challenge it.

It speaks volumes about the board and the CEO that correspondence to the HSE would include a provision that under no circumstances should the Committee of Public Accounts be informed. I think it was appalling to take that attitude and to express it in a letter to the HSE.

I ask the witnesses to reflect on all of the questions that have been asked today. I ask them to make a direct intervention with Ms Kerins and Mr. Flannery asking them to make themselves available in the context of the investigation that PAC is conducting. We still consider both individuals to be important witnesses in terms of bringing our work to a conclusion. It is essential that the witnesses, as representatives of the Rehab Group, communicate that to both parties. I am emphasising that point because of their comments about Ms Kerins and Mr. Flannery They may be true, and that is the opinion of the witnesses, but if they were that essential to the charity sector and if they were, to use the words of a witness "passionate" about the charity sector, they would come forward and clear up all matters relating to this issue. It is absolutely deplorable that neither one of them would come before the Committee of Public Accounts, and that they would use legal advice to suggest that we were acting unfairly, that we were on a witch-hunt and that it was a smokescreen for members and so on. I reject that entirely on behalf of members. I ask that this message be relayed to them. The witnesses have worked with them and know and speak to them.

We are trying to do a job which is essential. We account for the expenditure of taxpayers' money. In the interest of the charity sector generally and bringing closure to this controversy, it is essential that they come before the committee and explain themselves.

Aside from the questions we have, it is high time that their arrangements with the Rehab Group were published. Sooner or later they will be published. I think it would be a great service to the sector if they were. Let us get it all out in the wash, let us clarify it for the general public so that everybody knows what has been going on, what salaries people were being paid. We can then move on from here, however, there is no moving on until such time as all that information is put out in the public domain. I am only reflecting the view of the members, the workers and those involved with Rehab because people have certainly come to me. They want to see that happening. There is information in the public domain and they would like to see everybody in the same boat giving the same information. It is even more important after today's meeting because it is clear that there is a substantial link to taxpayers' money. The myth that it comes from a corporate entity making money does not stand up.

I thank each and every person present for coming forward today. It has been most helpful. I know, as Mr. Kerr said, that it is not something that one would relish or look forward to but the witnesses today have done a fine job in giving us the information. It is still incomplete in the context of the arrangements with those whom I have mentioned. I ask the witnesses to bring their understanding of what we are trying to do to bear on them so that we can conclude our work.

I think that is fair, not just to the PAC members but to the general public who actually fund the Rehab Group. This is taxpayers' money allocated by the Department. There is an obligation on the Department to account for the money and to explain to the Committee of Public Account what is going on. That has not happened, much to the regret of the committee and the general public who have examined and considered this controversy in the past few weeks. We want to bring it to an end and restore confidence in the charity sector. If people are passionate about the sector, they should take the step necessary to do likewise.

I thank the witnesses for attending today.

The witnesses withdrew.
The committee adjourned at 4.05 p.m. until 10 a.m. on Thursday, 1 May 2014.
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